They are urging the regulator to ensure its rules deliver benefits for consumers and are not concerned solely with internal processes.
A panel of brokers and insurance company representatives debated the impact of general insurance regulation at the UK Insurance and Financial Services Conference today at the QEII Centre in London. The event is hosted by the Chartered Insurance Institute. Regulation of the market was introduced in January 2005.
Amanda Blanc of insurer Groupama pointed out that the initial cost of achieving compliance with regulation was estimated at £200 million, with ongoing annual costs of £160 million. She said this equated to £2.80 on the cost of every policy.
“We have to question the value of regulation at every turn,” she said. “Remember: some 77 million policies are sold every year but only 10,000 complaints are made to the Ombudsman, and only 40 per cent of those are upheld. Regulation may give us better products and services, but at what cost?”
Eric Galbraith, chief executive of the British Insurance Brokers Association, said brokers must accept the reality of regulation and make compliance a “lifestyle”. He added: “When it comes to remuneration we must manage conflicts of interest. We must have transparency but it must not be the mandatory disclosure of commissions.”
Paul Meehan of broker Smart & Cook said that regulation was introduced despite there being scant evidence of market abuse: “The vast majority of broker-client relationships centre on the quality and value of the product and service provided. That won’t be affected by FSA regulation.”
Mark Cliff of insurer AXA said regulation was positive in that it formalised commercial relationships between brokers and insurers, but that there was a danger of “inward focus”. He said: “We must challenge regulation that doesn’t benefit the consumer.”
Alec Finch of Alec Finch Group questioned whether regulation had been necessary: “It will not get rid of the rogues. But it will put the emphasis on training and competence and produce a generation of better-equipped brokers. That has to be good in the long term.”
