When Norwich Union sent its revised broker agreements out it could not have predicted such a backlash. Helene Dancer reports.

Norwich Union (NU) Touched a raw nerve last week, when brokers were sent the wrong agency agreement.

An administrative blunder meant brokers who should have received a revised terms of business document, were sent a terms of appointment revision instead. The terms of appointment document was intended for brokers who were not previously registered and had not previously received a terms of business document from NU.

An NU spokesman said: "The wrong people received the wrong documents."

NU intermediary business director Ken Wallace said the review followed NU's "post- merger conversion programme ".He had sent out a letter to brokers and intermediaries explaining the process.

Biba chief executive Mike Williams said the terms of business had more comprehensive wordings than the terms of appointment and the latter "caused some disquiet, to say the least,"he said.

"We didn't like what we saw." Following a discussion with NU, Williams said Biba members could request a terms of business document if they preferred it. "NU has no problem with issuing a different document for brokers," he said.

Offensive clauses
IIB director general Andrew Paddick said the terms of business did not have the "offending clauses "that he had highlighted in the terms of appointment. Paddick said he fielded "hundreds "of calls after brokers received the terms of appointment document. He subsequently urged brokers to reject the new terms. "Brokers are not happy," he said and called the revised document "very unilateral ".

In a letter to brokers, he highlighted clauses that he found offensive. He said brokers were particularly concerned with a clause, which stated that NU reserved the right to suspend or cancel the agency at any time, without having to give a reason. In his letter, Paddick said this clause would enable NU to "hijack brokers 'clients to NU Direct or transfer the business to a more favoured broker ".

An NU spokesman responded by saying NU had "absolutely no hidden agenda "to take business to the direct market. "We ave absolutely no desire to do this," he said.

"Business from intermediaries is our largest channel. We consolidated the terms from our mergers and are not suggesting anyone is at a disadvantage."

He said the clause was "commonplace "and had always been in the contracts. "It's not something new," he said. "The fact that people are not aware of it is a point, but we 've not changed the rules."

Another problem Paddick highlighted was the Data Protection Act notices in certain NU documentation. Paddick said the insurer could use personal, policyholder specific information "for the purposes of directly canvassing and cross-selling other NU, group or associated company products to brokers ' clients-unless they wrote to NU head office saying `no thanks '".

Graham Gomme Insurance Brokers man- aging director Graham Gomme said he was "incensed "by this.

"I find it unethical and unacceptable," he said. Paddick suggested that a "yes please " option for the policyholder should be printed instead.

The NU spokesman said the insurer was not doing anything untoward. He said the data protection notice was already on the pro- posal form and NU was just standardising the clause.

"It is there to assist brokers with market- ing," he said.

But not all brokers were upset with the revisions. The Broker Network managing direc- tor Grant Ellis said: "As an industry, we are poor at rationalising the relationship between the broker and the insurer. The terms of business tend to be one-sided, but insurers are usually amenable to altering and discussing them."

Premium confusion
He responded to another of Paddick's concerns that brokers should not act as "financial guarantors "of policyholders. The clause in question stated that the agent would be required to collect all premiums and to pay return premiums when they were due, unless the insurer had agreed other arrangements.

"If a broker is writing a policy on behalf of a client, it is incumbent on the broker to collect payment from the customer," said Ellis. "This has not been the case so far and has been a bit of an anomaly. It depends if the broker sees himself as an agent of the insurer or an inde- pendent business which happens to place business with the insurer."

EH Ranson managing director Simon Bolam said not much had changed and he accepted the document "without being unduly concerned ".

He aid: "We have a good relationship with NU and that is as important as the agency agreement. If NU follows the direct route,it will lose a huge amount of confidence from a massive broker market."