british insurance brokers’ association manifesto … insurance brokers’ association manifesto...

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British Insurance Brokers’ Association

Manifesto 2014Delivering for our customers

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IntroductionThis Manifesto heralds the launch of the new BIBA-Acturis Insurance Price Index,* which will help us to identify trends and movements from more than £4 billion of insurance premium. This is an exciting milestone, as it will allow us a regular and reliable insight into premium trends across a variety of different consumer and business policies. The cost of insurance has been a political issue itself in recent years – and this will help inform that debate. However, the broad scope of the index will also help give us a wider insight into the economic health of the country, the cost of living, and our sector’s role in that.

Regarding the cost of living or doing business, one change that has become very clear to BIBA members is that the new regulator, the Financial Conduct Authority (FCA), is proving to be more costly and more onerous than its predecessor. This has a direct impact on the effectiveness of the service that BIBA members are able to provide to their customers. Insurance brokers are low risk and BIBA will do everything it can to ensure that in this year of delivery the FCA delivers proportionate and cost-effective regulation for insurance brokers and their customers. Steve White BIBA Chief Executive

Speaking at the Conservative Party Conference in 2013, the Prime Minister said to assembled business leaders that we need a recovery based on business success and he needs our ideas. This Manifesto is our response.

The 2014 Manifesto sets out BIBA’s key policy concerns and campaigning themes for the coming year. BIBA’s membership is extremely diverse, offering a full cross-section of economic life in the UK. BIBA’s largest members are global multinationals, and some of the most well-known names in the City of London. However, 85% of BIBA’s membership is made up of small and medium sized enterprises (SMEs) which can be found in most towns and cities in the UK.

The contents of this Manifesto draws on the full range of that experience, setting out a number of key areas where more can be done to help support consumers and their families, support businesses that provide vital employment, and help the insurance industry itself which plays such a critical role in protecting customers.

About usThe British Insurance Brokers’ Association (BIBA) was formed in 1977 and is the UK’s leading general insurance intermediary organisation. We represent the interests of insurance brokers, intermediaries and their customers.

Insurance brokers are the agent of the customer and the insurer and put the client’s interests first. They can provide advice, access to suitable insurance protection and risk management.

BIBA Manifesto 2014 | About us BIBA Manifesto 2014 | Introduction

k53% of all general insurance is sold by a broker1 kBrokers arrange 81% of all commercial insurance business2

k400,000 enquiries to our BIBA Find A Broker service every year3

kOur members provide more than 100,000 UK jobs4

kBrokers contribute 1% of GDP5

k1,924 regulated member firms, operating out of 2,520 offices in the UK6 kWe run Europe’s largest insurance conference with 5,300 attendees and more than 170 exhibitors7

Attributed to: 1. ABI 2. ABI 3. BIBA 4. BIBA 5. The contribution of insurance brokers to the UK economy Report to BIBA/Prepared by London Economics 6. BIBA 7. BIBA

* See page 4 for further details of the BIBA-Acturis Insurance Price Index

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This will be presented as an insurance ‘shopping basket’ cost for families and small businesses. We will be tracking the overall movement of premium including the following sectors:

1. Commercial vehicle2. Private car3. Household

(Buildings and contents)4. Package policies5. Tradesman

(subset of package)6. Commercial liability 7. Commercial combined8. Fleet9. Property owners

We believe that the combination of BIBA and Acturis is an extremely powerful channel to generate and relay powerful industry insights and analysis.

Speaking at the insurance summit in 2012, the Prime Minister said: “We want to look at what action we can take to bring down insurance premiums and bring down the cost for drivers, families, consumers and business.”

Therefore, BIBA has partnered with Acturis, an award-winning IT service provider, to develop the new BIBA-Acturis Insurance Price Index. This will help us identify trends and movements over nine key insurance indicators in the market, helping us to track changes in particular sectors and the overall changes from more than £4 billion of insurance premium.

New BIBA

- Acturis Insurance Price Index

BIBA Manifesto 2014 | New BIBA – Acturis Insurance Price Index BIBA Manifesto 2014 | Working with Government

BIBA is committed to working with Government to deliver better outcomes for consumers, businesses and the insurance industry.

We will commit to help the Government implement the UK Insurance Growth Action Plan particularly in the key areas of the UK industry in overseas markets, the UK as a location for insurers, serving UK insurance customers and skills and diversity in insurance.

BIBA is working closely with the following Government departments

kThe Department for Work and Pensions (employment partnership agreement)

kHM Treasury (IMD revision, regulation and European directives)

kGovernment Equalities Office (signposting)

kThe Department for Transport (young drivers)

kDriver and Vehicle Licensing Agency (MyLicence)

kDepartment for Environment, Food and Rural Affairs (DEFRA) and the Environment Agency (the future of flood insurance)

kThe Cabinet Office (business continuity)

k The Office of Fair Trading and the Competition Commission (motor insurance)

kUK Trade & Investment and the Foreign and Commonwealth Office

(trade credit)

kThe Ministry of Defence (insurance for our armed forces)

kMinistry of Justice (whiplash claims)

kThe Home Office (riots)

Working with Government

BIBA Manifesto 2014 | BIBA’s 2014 top aims BIBA Manifesto 2014 | Campaigning issues 2014

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4. Helping SMEs BIBA is fully committed to supporting the SME sector and will be tackling issues including claims, underinsurance, riots, tax and the Law Commissions’ proposals that will affect commercial customers.

5. A level playing field for distribution BIBA wants to see greater protection of the UK insurance market and will work with the UK Government on their balance of competences review to address the issue of passported insurers.

6. To track and measure insurance premiumsThe new BIBA-Acturis Insurance Price Index will help us to identify trends and movements from more than £4 billion of insurance premium.

1. Delivering access to suitable insurance protection BIBA will work with consumer bodies, Government departments, insurers and all stakeholders to help facilitate greater access to insurance via ‘signposting’ and improved communications for all customers.

2. Delivering a competitive regulatory system BIBA wants a strong regulator who ensures an appropriate, proportionate and cost-effective approach to regulation. We believe the regulator should also recognise the low risk nature of general insurance brokers so as not to stifle competition. New research shows how we have the most expensive regulatory system in the world (page 24).

3. Claims – improving understanding and the role of the insurance industry When a customer suffers a loss, this can be a stressful time. The BIBA-led Claims Working Group will aim to enhance the customer experience of the claims process.

BIBA’s 2014 top aims

Chapter 1: Delivering for consumers 1. Delivering access to suitable insurance protection2. Price comparison websites3. Delivering flood insurance protection 4. Making motor insurance more affordable and accessible 5. Information overload6. Claims – improving understanding and the role of the insurance industry

Chapter 2: Delivering for business 7. Helping SMEs with: • Claims • Underinsurance • Floodinsurance • TheLawCommissions’newlawsforbusiness8. Protecting small businesses from the cost of riots9. Delivering a competitive tax system

Chapter 3: Delivering for the insurance industry 10. A level playing field for distribution 11. Breaking down barriers to international trade 12. Protecting client money 13. Delivering an appropriate regulatory system 14. Delivering education, jobs and careers in the broking sector15. Delivering a fair compensation system16. Ensuring Europe delivers the right directives

Campaigning issues 2014

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BIBA Manifesto 2014 | Delivering for consumers BIBA Manifesto 2014 | Delivering for consumers

Chapter 1Delivering for consumers

1BIBA brokers’ primary aim is to help consumers and businesses access suitable insurance.

However, millions of people, for a variety of reasons, are not regarded as a standard insurance risk. Their risk is effectively a square peg that will not fit into a round hole and may often be rejected by online providers.

This could include home owners with properties at risk of flood, subsidence or where the property is left unoccupied, and motorists with imported vehicles. But non-standard markets are readily available through BIBA brokers.

BIBA launched a ‘signposting’ agreement for older motorists and holiday makers with the Association of British Insurers (ABI) and Government which has subsequently helped more than 100,000 older people access motor and travel insurance since April 2012.

We think signposting (where an insurance seller, who does not wish to insure a particular risk points the customer to someone that can help) is an immensely valuable service for consumers. BIBA already receives 400,000 enquiries a year and we are keen for our Find a Broker service to help customers find a home for these risks.

Delivering access to suitable insurance protection

BIBA’s CALL FOR ACTION

We are calling on consumer bodies, the Government and the industry to help customers access suitable insurance more readily. BIBA will respond to the HM Treasury UK Insurance Growth Action Plan and work with Treasury and other stakeholders to help customers access the insurance products they need with information that enables them to make informed choices. We will also explore the potential for further signposting agreements for other types of cover.

We suggest that Government sets up a working group of senior officials from consumer bodies, the insurance industry and Government to help facilitate access to, and deliver a better understanding of, general insurance. We therefore ask the Government to scope out the initial membership and terms of reference for the formation of this group.

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Mark Scholefield who suffers from cerebral palsy, plays wheelchair basketball at a high level and has just secured a contract to play professionally for an Italian team. He was due to leave the UK in September 2013 to play in Italy until May 2014. Mark experienced difficulty accessing insurance for his personal possessions, medical cover and his car.

Mark’s mother Karen Scholefield was assisted by Sandra Dawson from H&R Insurance Services and in addition was signposted to the BIBA Find a Broker helpline. She was put through to relevant brokers for each type of insurance where solutions were provided.

Karen said: “ The brokers provided an excellent service, the process was very straight forward, they

ran through the main features of the insurance policies with me. They were a tremendous help and it was a great comfort to know that Mark had appropriate cover in place prior to his departure.”

CASE STUDy Customers have told us how valuable signposting can be:

Delivering access to suitable insurance protection


BIBA wants the FCA to look at the following key areas to ensure that customers are receiving the right outcomes:

l How information is presented and whether it might lead to consumers not fully understanding the service they are getting.

lMake certain there is not too much of a focus on headline price and whether consumers may be misled into purchasing insurance products or add-ons that do not meet their needs.

l Making sure the consumer is at the heart of a firm’s business model and managing conflicts of interest.

l Ensuring that comparison sites do not use consumers’ data inappropriately.

l Outlawing anti-competitive Most Favoured Nation (MFN)* clauses which can cause consumer detriment. By not allowing brokers to offer lower prices for the same product elsewhere.

2 When the FCA’s Financial Services Consumer Panel addressed the annual European Credit Convention in Rome, it set out some of the problems associated with the way insurers compete for consumers.

It said that the current pressure on UK insurance business models from internet comparison sites had led to firms competing and promoting policies on headline price alone. This situation has led to traditional policy features being taken out and to consumers finding that they are not covered as they expected when making a claim.

Price comparison websitesBIBA welcomes the FCA’s review of comparison sites. The FCA said it wants to ensure that price comparison websites are making it easy for consumers to make an informed and balanced decision about buying general insurance.

The FCA is going to look into the role that these websites play in distributing motor, home and travel insurance products and the potential risks involved. Consumers may not fully understand the services provided by price comparison websites and may be misled into purchasing insurance or add-on products that do not meet their needs.

* A MFN Clause is a part of a comparison site’s contract which means a broker cannot offer a product listed on their site elsewhere for a lower price.

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Flood

4 BIBA has been working hard to help reduce the cost of motor insurance. We have engaged with 10 Downing Street, HM Treasury, the Competition Commission,

Making motor insurance more affordable and accessible

the Office of Fair Trading, the Transport Select Committee, Ministry of Justice, FCA, Department for Transport, DVLA and the Driving Standards Agency.


BIBA believes DEFRA must continue its long-term investment in flood defences. We believe any replacement for the commitment to provide cover in the outgoing Statement of Principles on the provision of flood insurance should not result in a reduction in the scope of that protection. It should not only cover buildings and contents but also small independent businesses, including sole traders, partnerships and limited companies with up to 10 staff and/or under £1 million turnover.

3 Thousands of businesses and property owners suffer the misery and disruption of flood damage every year.

The insurance industry and Government are working together to create a framework for the future availability of flood insurance.

BIBA is committed to this process and our specialist members will continue to provide innovative solutions.

Delivering flood insurance protection



BIBA has a six point plan to reduce motor insurance costs:

1. young drivers. BIBA is supporting a new post-test driver training course with the Institute of Advanced Motorists and young driver training company, Ultimate Car Control. We believe this initiative should lead to improved driving skills resulting in safer journeys, which in turn should lead to fewer insurance claims, driving insurance costs down. We are also working with the Government’s Young Driver Working Group and are supportive of drivers learning to drive from the age of 16 to extend the period of learning to take the test after they are 17 years old.

2. Behaviour based driving. Telematics, black boxes and smartphone apps that measure and reward driver behaviour are a growing innovation in the young driver space. We will continue to engage and support the appropriate use of these innovations. With sales increasing by more than 100,000 in the last year alone.

3. BIBA welcomes the Ministry of Justice’s proposals to ‘reduce the number and cost of whiplash claims’. We support the proposal for an independent medical panel to diagnose genuine injuries. In a broker survey conducted by BIBA in November 2012, more than 71% of respondents stated the class of insurance that caused the most concern regarding fraud was motor.

4. We believe that activities by a number of claims management companies (CMCs) are causing consumer detriment as well as adding significant costs to motorists’ premiums. A framework of more appropriate supervision of CMCs is the long-term solution. Specifically, the application of the FCA’s 11 Principles for Business (covering integrity, conflicts of interest management and Treating Customers Fairly) to CMC’s is a fair and reasonable way forward to lead to fairer premiums for motorists.

5. Providing the insurance industry with secure access to DVLA driver licence records via the MyLicence facility will reduce motor insurance application fraud and save the equivalent of £15 for every motorist.

6. Promote and expand the system of signposting to help people access suitable insurance, particularly for young or convicted drivers.

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5 We believe that similarly to when you receive a prescription from a doctor, there should be a more focused and simplified disclosure, cutting out unnecessary red tape and ensuring customers more clearly understand the key facts and significant exclusions that apply to them. We look forward to making progress on this issue, working constructively with the Government and the regulator.

BIBA is aware of the minimum information requirements of the Insurance Mediation Directive (IMD) and the Distance Marketing Directive (DMD). However, we feel much more can be done in this area resulting in more informed customers and a reduced burden on businesses.

Information overload is a very relevant behavioural economic issue. Brokers are required to give enormous amounts of information to a customer. BIBA is concerned that the more information that is given to the customer the less inclined they are to read it.

Information overload


The Government and the FCA should launch a review into appropriate information for customers.


6 Many customers only appreciate the value of their insurance policy when they come to make a claim. The insurance industry pays out more than £40 million in claims every day (combining motor, property, liability, travel and pet insurance). We want to work with stakeholders to continue to develop and highlight customer understanding of how the insurance industry works and so reduce underinsurance, non-disclosure and fraud. BIBA also aims to identify the common, avoidable causes of why some claims are rejected.

Claims – improving understanding and the role of the insurance industry


The BIBA-led Claims Working Group will look to:

– enhance the customer experience and understanding of the claims process and;

– foster wider public understanding of the role of the insurance industry in meeting claims.

Underinsurance BIBA will promote guidance on avoiding underinsurance for consumers and businesses in order to help them arrange suitable cover.

Claims rejectionsBIBA is working with AXA Insurance to provide advice to brokers on the common reasons why claims are repudiated in the UK market and how such losses can be avoided through risk reduction action. This will significantly enhance brokers’ ability to help their clients reduce their risk and avoid damaging uninsured losses.

FraudFraudulent insurance claims also cost innocent policyholders collectively £2 billion* every year adding to everyone’s bill. BIBA will work with anti-fraud organisations including the Insurance Fraud Bureau to reduce deliberate and/or reckless misrepresentations and any other form of application fraud.

* Insurance Fraud Bureau

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BIBA Manifesto 2014 | Delivering for business BIBA Manifesto 2014 | Delivering for business

Chapter 2 Delivering for business


Commercial claims The BIBA-led Claims Working Group will tackle issues such as reservation of rights and the basis of the contract clause to create a smoother claims process for smaller businesses.

BIBA will engage with the FCA’s review of commercial claims and will work with insurers around the issues of warranties and conditions within policy wordings to make them more customer friendly and easily identifiable.

Underinsurance BIBA will create new guidance on underinsurance risks for businesses in order to help them arrange suitable cover and avoid unnecessary problems with a claim.

FloodsWith the Statement of Principles on flood insurance coming to an end, we will work with all stakeholders to help support small businesses in accessing flood insurance.

Law Commissions’ proposals for new insurance contract law for businesses BIBA will work with the Law Commission on their review of insurance law for businesses. BIBA welcomes the proposals from the Law Commission to bring greater clarity to business insurance contracts going forward. Insurance guidance for SMEs BIBA will be launching a new members’ guide ‘Small Business Insurance for Dummies’ as a tool to help our members facilitate the arranging of insurance with their SME customers.

7 The vast majority of SMEs arrange their business via BIBA brokers and 85% of BIBA’s membership are themselves classified as SMEs. BIBA is fully committed to supporting SMEs and will be looking at the key insurance areas detailed below.

Helping small and medium sized enterprises (SMEs)

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We agree with the principles that the Police must continue to be accountable for riot damages when the Act is reviewed. We also agree that customers and insurers must continue to receive compensation from the relevant police authority although we are concerned that there are talks of capping customer and insurer compensation.

BIBA supports the development of a Riot Claims Bureau and for the inclusion of cars within the scope of compensation. We hope that the Government will agree to the proposals from the independent review that compensation is calculated on replacement value rather than an indemnity basis. However, we think further thought is required as to how it is officially decided that a riot has taken place and who makes this decision.

8 Business resilience is vital for UK SMEs and BIBA will continue to work with the Home Office and the independent reviewers of the Riot Damages Act to ensure suitable protection for small businesses.

Protecting small businesses from the cost of riots

BIBA Manifesto 2014 | Delivering for business BIBA Manifesto 2014 | Delivering for business


We urge the Government to remain at the forefront of policy development and dialogue here, to ensure the UK’s competitive position is maintained and ultimately delivering competitive business rates for UK companies.

9 Over the past five years, a number of different UK companies have relocated their head offices to overseas territories such as Ireland, Holland and Bermuda where the tax system is perceived to be more business friendly. This is a concern as we want London to maintain its position as a world leading insurance market, not for firms to go elsewhere because of our tax system.

The Government’s phased reductions of the headline corporation tax rate, and its reforms to the controlled foreign companies rules, are very welcome. However, a competitive tax system also implies a stable, predictable landscape – to that end, the Government’s initiative to map the future course of

Delivering a competitive tax system

corporation tax policy through the Corporation Tax Roadmap, and its determination to hold the course, is also very welcome. However, there are areas which do require further attention – notably on international tax reform, where it is important that all parties work together.

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BIBA Manifesto 2014 | Delivering for the insurance industry BIBA Manifesto 2014 | Delivering for the insurance industry


BIBA wants to see greater protection of the UK insurance market. The UK must raise this issue in Europe and the UK regulator must do more to work with passported insurers’ domestic regulators. BIBA believes that the Government’s balance of competences review is the ideal vehicle to take this issue forward.

Passporting – a level playing field Passported, non-UK regulated overseas insurers have the potential to damage the UK insurance market.

548 insurers have so far exercised their right to passport into the UK under the 3rd Non-Life Directive*. BIBA members argue that a number of them may not always be well capitalised as they operate from a home state where insurer’s solvency (particularly in potentially stressed scenarios) is not as actively supervised as in the UK. They may also not offer adequate policyholder protection in the event of their failure.

Unfair competition damages the UK market. When passported insurers enter the UK market, it has ended with uninsured customers and reputational issues for the industry. BIBA does not wish to see competition in the interests of consumers being damaged, but we believe that this type of competition does not work in the interests of customers.

A level playing field for distribution 10 The UK must be able to better navigate the Treaty of Rome to prevent this damaging scenario. This issue is becoming more and more of a concern in our sector and is undermining the UK market.

* ABI

Chapter 3Delivering for the insurance industry

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BIBA wants to see unfair barriers to business removed and more free trade agreements created leading to greater opportunities for UK insurance brokers.

Certain markets around the world have trade practices designed to protect their domestic market and restrict the activity of foreign competitors. This inhibits growth from the UK insurance market.

Breaking down barriers to international trade 11BIBA Manifesto 2014 | Delivering for the insurance industry BIBA Manifesto 2014 | Delivering for the insurance industry

BIBA welcomes the HM Treasury’s UK Insurance Growth Action Plan and the co-ordinated targeted approach to establishing a programme of activity with Brazil, China, India, Indonesia and Turkey.

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12 When a broker collects a premium from a customer, the broker holds the money in an agency capacity either for the customer or the insurer. When holding the money as agent of the customer, the FCA’s client money rules apply and funds are protected within a trust environment. Where the money is held as agent of the insurer these monies are known as risk transferred (the risk of loss having been transferred from the customer to the insurer).

Regulatory pressures on insurers from the Prudential Regulation Authority (PRA) to hold increasing levels of capital to offset their credit risk disincentivises insurers from operating on a risk transfer basis with brokers. This has a detrimental impact on competition. Brokers without client money handling permission become restricted to only offering customers the products of

Protecting client money insurers who are still prepared to grant risk transfer – thus potentially excluding offerings more suitable to the client’s needs. BIBA is working on an approach to risk transfer which would allow the insurance market to adopt a single standard for providing assurance to insurers about the design, implementation and operating effectiveness of controls over risk transfer money held by brokers.

We are aiming to give greater confidence to clients, the market and the regulator.


BIBA calls for insurers to fully co-operate with this initiative for the benefit of customers in order to achieve unconditional risk transfer across the market.

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London Economics has updated BIBA’s cost of regulation research for 2014. The research shows that the cost of regulation for small brokers (with less than £1 million in revenue) has increased from 3% three years ago to 4% of income now.

It also shows that on average the UK has the most expensive direct cost of regulation in the world with large brokers paying FOURTEEN TIMES the global average cost in comparison to other nations.

Large BIBA members have told us that they now focus resource and investment towards operations based in overseas markets as the red tape and cost of the UK is completely out of proportion when compared to those markets. These large brokers have come to the conclusion that it is no longer commercially viable for them to operate in some UK markets. This has the effect of reducing competition in these markets, which is contrary to the FCA’s competition objective.

Where mis-selling of insurance has been noticeable, it has been in relation to payment protection insurance (PPI); a product with which insurance brokers generally have little involvement. Brokers should not be held to account for the actions of other financial services sectors.

BIBA will work with the FCA on the review of its funding to find a more equitable system.

Treasury accepted the recommendation of the Parliamentary Commission on Banking Standards1 that the FCA should replicate the Bank of England’s stated intention for the PRA to operate at a lower cost than its equivalent part of the FSA . BIBA would like to see the FCA move forward with this recommendation quickly. BIBA will push to see that savings are passed on to regulated firms.


1 See item 109 in table on page 75 in the following link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/211047/gov_response_to_the_parliamentary_commission_on_banking_standards.pdf

BIBA Manifesto 2014 | Delivering for the insurance industry BIBA Manifesto 2014 | Delivering for the insurance industry

Delivering an appropriate regulatory system13 Delivering an appropriate regulatory system

The insurance broking sector is a low risk section of the economy. Independent research from Charles Rivers Associates concluded that systemic risk does NOT arise from brokers. Brokers pose a low risk to customers. Unlike insurance companies they do not hold insurance risk and customers would continue to hold valid insurance cover if their broker was to fail.*

85% of our members have less than 10 staff. Being small businesses who have no systemic risk, we believe it is important that they have proportionate regulation, yet we have a regulatory system that is the most burdensome and expensive in the world.

The FCA’s CEO Martin Wheatley promised at the BIBA conference in May 2013, his personal commitment to delivering proportionate regulation. Instead, we have seen nine new reviews come out of the regulator that takes brokers’ resources away from the customer and adds significantly to costs with a 15% increase in regulatory fees.

FCA Cost of Regulation DiagramSource: London Economics 2013

Direct cost of regulation (as a percentage of insurance intermediation income) – average for small, medium and large insurance broker firms.

* The economic downtown since the crash in 2008 has resulted in no significant insolvencies or ‘bail-out’ requirements from firms in the insurance broking sector.

Results of research:l Of 23 leading nations, the UK

was the most expensive direct regulatory regime.

l The UK regulatory regime cost more than five times that of our main competitors in New York and Japan.

GBR0.98%

SIN0.49%

LUX0.47%

DEN0.4%

HKG0.31%

BER0.12%

NED0.26 %

IRE0.22%

SWE0.19%

POR0.07%

FIN0.27%

AUS0.02%

SUI0.03%

BEL0.06%

FRA0.02%

ESP0%

GER0%

KOR0%

NOR0.09%

NYS0.11%

JPN0.08%

ITA 0.03%

CAN0.04%

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To provide a sustainable service that is there for tomorrow’s customers, the insurance broking sector must attract and nurture talented, younger individuals.

BIBA signed a partnership agreement with the Department for Work and Pensions in 2013. This means the Government will ensure it shares knowledge and information regarding careers and incentives for the broking sector.

Delivering education, jobs and careers in the broking sector14BIBA Manifesto 2014 | Delivering for the insurance industry BIBA Manifesto 2014 | Delivering for the insurance industry

BIBA will work with the Department for Work and Pensions and others in promoting careers in insurance broking ranging from school leavers and those on a level 5 apprenticeship programme, through to those who are currently seeking work.

BIBA will also continue to promote the use of our online training and competency tool broker ASSESS to help improve education.

In 2014 we will be working with partners from across the insurance sector to meet the recommendations of HM Treasury’s UK Insurance Growth Action Plan and agree a nationwide apprenticeship blueprint of networking and attracting talent. This is aimed at promoting the benefits of a career in the insurance sector and ensuring the longevity of the UK as a major financial services market.

BIBA members employ more than 100,000 staff and brokers are always looking for new employees across the UK. BIBA also believes there needs to be greater awareness of the training, apprenticeships and qualifications available to the sector.



Fairer separate sub-classes for pure insurance brokers and secondary sellers.

15 The Financial Services Compensation Scheme (FSCS) is the UK’s statutory fund of last resort for customers of financial services firms. This means that the FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it.BIBA fully supports the concept of compensation; it is important for both customer protection and increasing confidence in the insurance sector.

However, BIBA brokers have seen a fifty-fold increase in their FSCS fees during the last few years, and yet this is primarily due to mis-sold PPI policies from secondary intermediaries (non-BIBA brokers).

Following an in-depth report from consultancy firm Oxera we believe that the existing FSCS model should be slightly modified to ensure it is fairer and more representative.

Delivering a fair compensation system

BIBA proposes a fairer system where the current insurance intermediary pot splits to become two. The first pot would be a separate sub-class for ‘pure’ insurance brokers, where insurance broking is their ‘core business’. The second sub-class would include a pot of secondary intermediaries whose core business is selling something else, for example cars, loans, veterinary services etc.

We believe we have an economically sustainable, affordable and equitable funding model for both classes and BIBA brokers would be better protected from bad practices carried out by other sectors where we have no control or influence.

A recent survey of BIBA members shows:l 53% state the impact of the

FSCS fees have either delayed or resulted in a cut in investment in their business.

l 40% state it has resulted in a cut in expansion.

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From a competition perspective it is essential that a level playing field with alternative forms of distribution such as travel agents and direct writers is established. In particular in the area of information disclosure, such as statements of demands and needs, breadth of choice, suitability of advice and disclosure of remuneration. It is essential that the customer is provided with the same information, irrespective of the form of distribution.

In addition, in order to avoid distortion of competition, there is an absolute need for ensuring a level playing field by requiring direct insurers to disclose comparable acquisition costs equivalent to those of brokers.

BIBA’s CALL FOR ACTION– level playing field

The UK is right to look at the ‘balance of competences’ with Europe.

Much of our legislation comes from Brussels and has a significant effect on our sector.

The Insurance Mediation Directive is currently being recast. This directive is vital to the competitiveness of the insurance broking market.

We want to see the recast IMD deliver:

– A level playing field – Proportionate disclosure of

information– Appropriate scope.

Revision of the EU Insurance Mediation Directive (IMD)

IMD – level playing fieldThe IMD is the European directive that sets regulatory rules for insurance intermediaries which are implemented in the UK by the regulator. The IMD is currently being revised by the European Commission and we want to see its broad scope maintained. It is important that customers receive a consistent and appropriate suite of disclosures wherever they buy their insurance. We believe all insurance sellers, whether they be comparison websites or travel agents, should follow the same regulations.

We call on decision makers in the European Parliament, Commission and Council of Ministers to provide a level playing field for insurance brokers and their customers through the reform of the IMD.

BIBA welcomes the proposal to widen the scope to include all those selling insurance. However, we have concerns with a number of areas that could lead to consumer detriment and distortion of market competition.

Ensuring Europe delivers the right directives 16BIBA Manifesto 2014 | Delivering for the insurance industry BIBA Manifesto 2014 | Delivering for the insurance industry

BIBA was involved in the establishment of industry guidance for the concept of commission disclosure upon request. If automatic disclosure is required, then there must be a level playing field with all other providers of insurance across Europe.

BIBA will lobby for the UK position of disclosure upon request within the IMD revision.

Transparency and disclosure of remuneration

We support the existing UK position of disclosure upon request.

No evidence currently exists showing that compulsory automatic disclosure of commission by insurance intermediaries, as proposed by the EU, will yield significant benefits to customers of insurance intermediaries.

Our analysis of available information indicates that a mandatory disclosure regime for non-investment insurance neither meets in any way nor reflects the views of major stakeholders. Neither EIOPA1, UEAPME2, BIBA, BIPAR3, or insurers agree with mandatory disclosure and it was not supported by the PwC4 study on the impact of the revision of the Insurance Mediation Directive – Final Report, prepared for the European Commission DG Internal Market and Services.

BIBA’s CALL FOR ACTION– transparency and disclosure of remuneration

1 EIOPA (European Insurance and Occupational Pensions Authority) (formerly CEIOPS)

2 UEAPME (The European Association of Craft, Small and Medium-sized Enterprise)

3 European federation of Insurance Intermediaries

4 Price Waterhouse Coopers (PWC) study – (ETD/2007/IM/B2/51– Final Report, prepared for the European Commission DG Internal Market and Services, May 23, 2011).

30 31

BIBA Manifesto 2014 | How brokers help customers

How brokers help customers

Our members treat customers fairly. They will:

lFocusonthecustomer’sneeds

lMake sure the customer understands what is, and is not, covered

lMake choices clear by advising of the range of products or services they offer

lExplain any professional advice they give – clearly and honestly

lClearly state the costs of the policy – including any fees they may charge

lProvide clear information and documents – as well as any help needed with the paperwork – to make sure the policy is issued promptly

lHelp the client to get their claim paid.

General insurance brokers and intermediaries will help businesses and individuals find suitable solutions to manage their risks. They are regulated by the FCA.

Brokers are the agent of the customer and the insurance company. They work in the customer’s best interests, providing advice, guidance and choice on a range of insurance products.

They can assist with identification, measurement, management and control of risk, arrange appropriate insurance solutions, and represent their client in the negotiation of claims settlements.

“Having been victims of a devastating arson attack in July 2012, we were very concerned about the risks to the future of our business. We looked to our insurance broker for their support.

“By 8am our insurance broker J & A Brokers Limited heard about the fire and was immediately on-site with all documentation and was actively sorting out the situation. We had lost all power on-site including phone lines that could not be redirected, but thanks to the help from our broker, by the end of the day we had full power with restored phone lines and were able to operate again.

“We can’t thank J&A Brokers enough, for their hands-on approach. We feel that the support, help and advice we have received following the terrible incident were critical to the survival of our business.”

CASE STUDy

How brokers help with claims

BIBA Manifesto 2014 | How brokers help with claims

Alasdair Newton Omega Business Suppliers

Facilitating the settlement of claims is a principal outcome of what our members do. Brokers can add value in the claims process, helping clients to obtain a fair and prompt settlement from insurers. In research on behalf of BIBA, three quarters of brokers said that they have had a claim rejection overturned during the proceeding 12 months.

32 33

BIBA Manifesto 2014 | What BIBA does for members

Challenge” in the Houses of Parliament to an audience of MPs, Lords, key media and industry stakeholders. Regional TourListened and understood our members’ needs first hand via our Autumn Regional Tour with new CEO Steve White and Executive Director Graeme Trudgill visiting all 13 of the BIBA regions to engage with and act on member issues.

Helped members deal with compliance issues by launching a new compliance helpline for members with UKGI.

Helped promote recruitment for brokers by signing a Department for Work and Pensions’ Partnership Agreement with the Minister for Employment.

Promoted the benefits of brokers by working with the Money Advice Service, Macmillan Cancer, Which? and other consumer groups.

Improved the format of broker/insurer TOBAs (terms of business agreement) by creating a template with the ABI.

Promoted the benefits of using a broker on BBC 1’s Breakfast, Rip off Britain, Don’t Get Done in the Sun, Radio 4 Moneybox, You and Yours, Radio 5 Live, The One Show, Your Money, Their Tricks, Sky News and the BBC News channel.

Represented members’ key issues to Government, regulators, media and other relevant parties by setting out the policy agenda when we launched our Manifesto “Meeting The Growth

What BIBA does for membersBIBA membership pays for itself through:lThe new legislation and

regulations that we influencelThe business we generate

for memberslThe promotional opportunities

we providelThe negative legislation

we preventlThe market problems we resolvelThe training opportunities

we providelThe schemes and facilities

we managelThe sanctions checking

facility we offerlThe CPD events we runlFree entry to the largest

conference in Europe.

BIBA Manifesto 2014 | What BIBA does for members

38regulation updates

81regional events

22technical updates

61MP, MEP,MSP, Lord,

Civil Servant meetings

100,000older people signposted to the BIBA Find

a Broker service for motor and travel insurance

455The number of times BIBA

promoted brokers in the media during 2013

41FCA meetings

30,000broker ASSESS licences issued

1,873miles travelled on the regional tour

34 35

BIBA will retain a strong regional focus with the Regional Chairs forming a Regional Chairs’ Advisory Board. The Chairman of this Advisory Board will also sit on the main BIBA Board.

The next stage of the strategic review is regarding professionalism. BIBA wants to raise standards and will be consulting members in 2014 about the potential for codes of professionalism, ethics, practice or conduct to promote high ethical and business standards.

1. Small brokers2. Larger brokers3. Networks, aggregators, MGAs

and other distributors; and UK nationals

4. London market and international members.

The interests of each segment will be represented by an Advisory Board. The Chair of each advisory board will sit on the main BIBA Board. The Small Brokers’ Advisory Board’s Chair and Deputy Chair will sit on the main Board, in recognition that 85% of BIBA’s membership comprises of brokers with 10 or less employees. For the first time the BIBA Board now also includes an Independent Non-Executive Director.

BIBA’s strategic review In October 2013 BIBA members voted to change the organisation’s Articles of Association. The first changes that were made were to the segmentation of membership and governance of BIBA, which created a new model separating members into four broad segments:

BIBA Manifesto 2014 | BIBA’s strategic review BIBA Manifesto 2014 | BIBA mission statement

Our mission statement

To represent and protect the best interests of our insurance broker and intermediary members and their customers.

We strive to achieve this by:

Promoting the services and the value of members’ contribution to the protection of our futures with advice, guidance, access to risk management and insurance solutions

Influencing the relevant decision makers and policy writers that affect our sector

Maintaining and developing a stable business environment in which our members operate by keeping them informed of relevant issues, providing a forum for discussion and the exchange of non-competitive information

Supporting members both collectively and individually through a series of facilities and support services.

By promoting, influencing, maintaining and supporting our members, we aim to help create an environment where members can deliver first class insurance solutions for their customers – the best insurance is a BIBA broker.

36Designed by beetroot (020 7749 0180)

Graeme TrudgillExecutive Director+44 (0)20 7397 0218+44 (0)7917 736 [email protected]

@graemebiba

Leighann ForsythHead of Communications +44 (0)20 7397 0223+44 (0)7917 738 [email protected]

Andy ThornleyCorporate Affairs Manager +44 (0)20 7397 0238+44 (0)7741 241 [email protected]

Steve WhiteChief Executive+44 (0)20 7397 0222+44 (0)7917 370 [email protected]

@stevewhitebiba

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