The British Insurance Brokers' Association (BIBA) has dismissed as "headline-grabbing" a report published by consultancy Mactavish which was highly critical of current remuneration from insurers across the sector.
The report, published today, claims that UK brokers receive as much as 80% of their remuneration from insurance providers and only 20% from clients.
The report concludes this is creating "a huge conflict of interest."
Given the highly regulated nature of the insurance sector, this report by Mactavish could be considered opportunistic and in light of their business model, designed to allow them to gain from these published opinions.”
In the report, Mactavish writes, "Much of broker remuneration is directly linked to premiums so brokers stand to benefit from the coronavirus-fuelled rise in insurance rates."
"These conflicts risk leaving brokers acting as distributors for favoured insurers - often using inappropriate, over-standardised policy terms which have again been exposed by failed coronavirus-related business interruption insurance claims."
"Policyholders are advised to run their own competitive tenders among brokers as a way of achieving better cover and lower premiums."
BIBA insists that to act in their customer's best interests is central to the role of its members.
In a statement the BIBA said: "Remuneration by way of commission is actually beneficial for customers who are able, because the broker is paid in this way, to receive advice before having to commit to buying a particular insurance policy."
"Conflicts of interests will always exist in any intermediated sector which is why the FCA, requires and monitors these to be managed, which they are."
"The FCA examined conflicts within a thematic review quite recently, and taking their findings into consideration we wholeheartedly dispute the issues raised by Mactavish in their report. Brokers have helped clients receive millions of pounds in claims payments since the beginning of the covid-19 pandemic and continue act for their clients to get fair claims settlements."
"Given the highly regulated nature of the insurance sector, this report by Mactavish could be considered opportunistic and in light of their business model, designed to allow them to gain from these published opinions."