With some intermediaries having accrued many years of renewal commissions from a loyal customer database, there is a concern that brokers could lose a highly lucrative income stream at a time when revenue from mortgages are in decline.
Bill Warren, director of the Complete Network, explained: “We recently had an AR join who had intended to join a more local network, until he realised he stood to lose around £20,000 a year in renewal commissions. The worry is that some brokers will only realise this on the eve of or after GI regulation coming into force.”
David Quick, managing director of general insurance network CETA, said: “Brokers need to act now to protect their renewal income. They will incur problems if they have joined a network as an AR, as it will be illegal for them to continue dealing directly with insurance companies regarding renewals business in the future.
“If a broker has written insurance business via CETA and has joined a network which we have arrangements with, we will continue to pay renewal commission.
“If the broker has joined a network which we do not deal with, they can transfer their renewals business to CETA and we will continue to manage the client relationship on their behalf.”
Meanwhile a survey from outsourcing provider Huntswood revealed that GI brokers had seen compliance costs double in the run-up to regulation.
Andrew Wheeler, senior consultant at Huntswood’s consulting practice, commented: “The level of resource that both insurers and brokers are committing to ‘GI Day” compliance is phenomenal and will keep on growing.”
