British brokers rail against regulation burdens

The increasing weight of regulation is impacting innovation and the delivery of benefits to customers, British Insurance Brokers’ Association (BIBA) Chairman Jonathan Evans told the group’s conference yesterday.

The Financial Conduct Authority (FCA) has “taken its eye off its own responsibilities” and regulation has become the top concern for member firms, he said.

“I agree with balanced regulation, but over regulation and excessive cost is impacting the sector’s ability to innovate, with knock on effects for customers,” he said. “I suggest to the FCA that it takes a take a long hard look at its own responsibilities and approach to our low-risk sector.”

CEO Steve White also questioned the high level of levies paid by brokers as part of the Financial Services Compensation Scheme, which provides protection for consumers when a financial firm fails.

“It is starting to feel that we are bailing out others who do not have the same standards as we do,” he said. “Globally, compensation schemes involving insurance brokers and intermediaries are quite rare. We never mind being leaders, but we must not be left paying over the odds for the failures of others.”

Mr White urged brokers to make their voices heard when the FCA produces a consultation paper on possible new funding approaches.

The BIBA conference returned to an in-person event in Manchester after it was held online last year and was cancelled in 2020 due to covid.

The event also heard that in relation to cladding issues, BIBA has worked closely with the Building Safety Minister’s office on an imminent professional indemnity insurance intervention for fire engineers.

BIBA and Allianz released a digital guide for SMEs on avoiding underinsurance, which the group describes as a persistent and widespread problem.

The Chartered Institute of Loss Adjusters estimates underinsurance to be present on over 40% of claims and the degree of underinsurance to be around 35-45%, the guide says.

“Not only do we know that underinsurance is already an issue, but the current economic climate, supply chain problems and rapidly increasing inflation could all mean that people and businesses are underestimating the amounts that they need to insure,” BIBA Executive Director Graeme Trudgill said.

“Allianz’s input on this vital topic will help us raise awareness and the information in the guide will help to reduce the problem.”