It is now nine months since the FSA pointed the way forward by identifying the six outcomes required to create a competitive and efficient market, following an extended period of research and consultation which took place in 2007. The FSA’s statement of today gives no indication as to when the proposed industry guidance will be made available but simply refers to the fact that the ‘industry has indicated its intention to submit parts of its guidance for endorsement’ by the FSA at some time in the future.
Two of the originally stated outcomes are especially critical. There is a need for automatic, mandatory disclosure of the source and amount of any broker's remuneration received from the market so that buyers know how their money is to be distributed and can, therefore, make their own assessment regarding any potential for conflicts of interest. There should also be total clarity as to whether the intermediary is acting as an agent of the buyer or the insurer. We believe that it is no longer acceptable for the intermediary to act on behalf of both parties during the same transaction, with the obvious potential for conflicts this implies.
AIRMIC members are aware of these issues and most have put relations with their own brokers on a footing that conforms with good practice. Many smaller corporate buyers, however, continue to purchase insurance without the information to which they are entitled. The time to confront any practice that distorts the marketplace in this way is long overdue.

We shall maintain our discussions with the various industry bodies to ensure that our members’ views are taken into account during the next stages of preparation of the proposed guidelines.

For further information, contact

Mark Baylis, Complete Communications, +44(0) 23 8065 1473 or +44(0) 7775 693994, mark.baylis@airmic.co.uk

Note to editors: AIRMIC represents risk managers and corporate insurance buyers in the UK, including 75% of FTSE 100 companies.