The Financial Conduct Authority (FCA) is demanding greater transparency from brokers and insurers working in personal lines with its new rules on renewals.
The word from insurers on the regulations – which include providing clients with their previous year’s premium price at renewal time, as well as encouraging them to shop around – seems to be that the move is a step in the right direction.
But what’s the opinion among brokers on pushing customers to compare their options?
Konsileo co-founder and CEO, John Warburton, told Insurance Business that increased transparency would only be an issue for those brokers in the “presumptive renewal logic.”
“Our view on best practice process is absolutely that the renewal conversation should be a very, very transparent dialogue between the client and the broker,” he explained.
While a yearly renewal does not necessarily mean that the client should change insurers each time – in fact this might not be in their best interest – it’s vital for brokers to carry out the process, he said.
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The regulations bring home the fact that brokers should be acting as risk advice professionals, “not a person who’s facilitating your access to the insurance market,” Warburton commented.
“If anything, it helps us a bit if more business comes to the market through being nudged towards being comparative,” he added.
Sunil Shah, managing director of C&M Insurance, said that as the broking community embraces regulation, there are a lot of positives to be gained.
“You can actually get value from it, because it improves your professionalism and it improves your delivery to the client,” he said.
However, having himself moved his business away from personal lines and into commercial, Shah expressed concern that brokers were being squeezed in this arena.
“One thing we can’t forget is that, like other businesses, brokers are here to make a profit,” he said. “So if we’re trading in a way that detracts from that, are we losing the incentive for a broker to remain in business – particularly if they’re dependent on personal lines?”
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