Ferma demands transparency from Europe’s brokers

Ferma presented its request for full remuneration transparency to BIPAR, the European Federation of Insurance Intermediaries, and received a positive response, according to Ferma President Peter Den Dekker.

Den Dekker presented his proposals to around 80 BIPAR members at the group's General Assembly meeting earlier this month.

“For the first time BIPAR members saw the exact wording of a disclosure document that we would like to agree upon. At this stage there was no statement of agreement or disagreement from BIPAR. But it was received positively,” Den Dekker told StrategicRISK in a telephone interview.

“BIPAR sees some positive items in our disclosure document that are going to be the basis for more in depth discussion at the end of February and early in March,” continued Den Dekker, who is also the Corporate Risk Manager for Dutch multinational Stork. At this stage insurers won’t be involved in these “in-depth” talks, he said.

The broker association is currently looking for feedback from its members on Ferma’s proposals.

Ferma’s request involves mandatorydisclosure from brokers on two types of remuneration. Brokers are being asked to reveal all financial remuneration linked to the servicing of the insurance contract, as well as the source and general description of any payments received that are not directly linked to the insurance transaction.

Den Dekker insisted that Ferma, the umbrella association for risk and insurance managers in Europe, is not giving any opinion on these remuneration agreements.

“In some cases the brokers may be able to show that there are services related to the so called contingent remuneration

Peter Den Dekker, Ferma President

It is “too early” to pass judgment on contingent commissions, those payments or sweetners that are received by brokers based on the volume or profitability of the insurance business they place and which may lead to conflicts of interest, said Den Dekker.

Ferma is not asking for these payments to be outlawed as RIMS, its American counterpart, has done.

“Ferma members would like upfront and transparent disclosure about who brokers receive payments from and on what basis, basically to determine what kind of services are related to those payments,” he said.

“In some cases the brokers may be able to show that there are services related to the so called contingent, or non transaction related, remuneration,” he continued.

Generally speaking, insurance buyers have to ask for detailed information about the types of remuneration that their brokers receive—it is not necessarily provided upfront.

As BIPAR and Ferma enter detailed discussions, Den Dekker is optimistic about securing a deal. “It might take some time, but I’m convinced that we will have agreed something before we go to our seminar in London at the end of September.”

On 29 and 30 September, Ferma is coming to the London Hilton Metropole to host its biennial seminar. More details about the conference are available in the March issue of StrategicRISK, available soon.