Brokers make ‘don’t ask, don’t tell’ agreement
European brokers' association the European Federation of Insurance Intermediaries (Bipar) has signed a transparency protocol with risk managers trade body the Federation of European Risk Management Association (FERMA), suggesting that brokers should fully inform clients of their remuneration packages - but only if asked.
The protocol also recommends that brokers tell clients upfront whether they hold any delegated underwriting authority from insurers and whether they charge fees or are paid from sums included in insurance premiums.
If clients ask for further information, brokers should disclose the sum of their fee included in the premium and detail how this remuneration is calculated "as appropriate".
This includes giving generic detail on any payments that take into consideration the contract as part of the calculations - which would include volume-based remuneration - including payments to parent companies and affiliates.
In a joint statement last week, Bipar chairman Jaap Meijers and Ferma president Peter den Dekker said that they recognised that the complexity of the insurance industry created the perception that it lacked transparency.
"This protocol addresses these concerns to underpin and enhance trust in the purchase of business insurance," they said.