ABI and Biba to hammer out a deal to resolve risk transfer requirement
The ABI and Biba will meet on 31 October to discuss the development of standardised agency agreements.
Biba regulatory working party chairman Chris Arter said that the meeting had come about as a result of the debate earlier this year between insurers and brokers over the issue of compulsory risk transfer, which formed one of the FSA's proposals for dealing with client money.
Since the FSA's decision to leave giving risk transfer at the discretion of insurers, both Royal & SunAlliance and Norwich Union have declared that they will rewrite their agency agreements to address risk transfer.
But one market source said that brokers are fearful that insurers will use new agency agreements to increase their differentiation between brokers, forcing some out of the market.
The source said that the ABI wanted to create a template agreement that can be tweaked by insurers in order to minimise the use of agency agreements as a competitive tool.
"The ABI is trying to ensure that they are 75% standard," the source said. "If they are all different then brokers would be up in arms."
An ABI spokesman said that the ABI had a responsibility to "facilitate smooth operation of the market".
"I think it's something we need to look at quite closely," the spokesman said.
Director general of the Institute of Insurance Brokers (IIB) Andrew Paddick said the IIB was also talking to the ABI about templated agency agreements.
"It's early days, but what I am hoping is that we can get a bit of industry standardisation," Paddick said.
But he acknowledged that getting insurers to use such templates could be difficult.
"Individual insurers will always do their own thing."
