Royal & SunAlliance is to carry out a major overhaul of its pricing structure in a bid to eliminate massive differences that are arising between its broker and direct arm quotations.

The composite insurer announced the review the week after Essex-based AJ Insurance Group lodged a complaint with its trade body, the Aiib.

The intermediary complained because RSA's direct arm offered to undercut its broker quote by more than 150%.

On a motor quote, RSA Direct offered to cover the policyholder for an annual premium of £225.33. The price RSA was offering through AJ Insurance was £565.16.

RSA spokesman John Sellers did not deny the price difference.

He said: "We're very concerned to hear of the rating discrepancy experienced by AJ Insurance… to eliminate such extremes we are currently reviewing our distribution channels and hope to have this completed by the end of this year."

He said that the reason broker-channel rates have increased significantly is because it has been outperformed by the direct channel.

However, RSA pledged that it would hold rates for the broker sector over the coming months to ensure parity with its direct arm.

The price difference infuriated John Wyatt of AJ Insurance. He said: "The insured had been a client of ours for the past 21 years, so this put us in a very embarrassing position."

The intermediary switched the policyholder to a rival insurer who has agreed to match the £225 quote.

Mike Slack, the Aiib chairman, said the price difference was a "prime example of the blatant double standards" used by some insurers when dealing both direct with the public and through the broker channel.

He said: "Insurers need to wake up to the fact that brokers and intermediaries are a vital distribution channel for their business and examples such as this will do nothing to foster relationships within the industry.

"We are very concerned to hear of the rating discrepancy experienced by AJ Insurance, and will be investigating the circumstances surrounding the case," he added.