AIRMIC responds to remuneration disclosure guidance

AIRMIC’s comment is published in full below:

We are pleased to note that the long-awaited guidance on transparency, disclosure and conflicts of interest in the commercial insurance market has been published by BIBA.

This industry guidance has been approved by the Financial Services Authority (FSA) and represents the position agreed by BIBA, LIIBA, IIB and the ABI. It is a step forward in the process of classifying the status of intermediaries and the means by which they are remunerated for their professional services.

“We will be considering what else we may need to do to promote an open, efficient marketplace.

AIRMIC chief executive John Hurrell

Whilst the industry guidance provides useful clarification, we note that the FSA stopped short of requiring mandatory automatic disclosure by intermediaries. Nevertheless, such disclosure will be mandatory whenever clients request it, and AIRMIC will be producing guidance for its members on how to request full disclosure and the detailed information that they should be seeking. This will enable members to judge whether they feel the market remuneration received by the intermediary could create grounds for potential conflicts of interest.

Perhaps a more critical issue relates to the capacity in which the intermediary is acting. We believe that it is not possible for an intermediary to act as both an agent of the insurer and of the insured at different times during a transaction without risking significant potential conflicts of interest. Again, we shall be providing guidance for members to ensure that they can make appropriate decisions relating to their choice of intermediary from a fully informed position.

'AIRMIC members are aware of the issues around transparency and potential conflict of interest and operate in a marketplace where the information they need is usually forthcoming. However, we are determined to reinforce good practice, and will be considering what else we may need to do to promote an open, efficient marketplace,' said chief executive John Hurrell.