The Association of Insurance and Risk Managers (AIRMIC) has released the results of a survey into broker transparency. The survey reveals a considerable increase in broker transparency over remuneration.
ARMIC received responses from 124 insurance buyers at FTSE 250 companies. There is evidently an increased interest on the part of buyers in broker remuneration.
The survey found that:
• Members whose brokers provide automatic disclosure of earnings: 64% (compared with 32% in June 2005)
• Members satisfied with their brokers' information on earnings: 73% (44%)
• Members satisfied that their brokers' charges are reasonable: 78% (43%)
• Members paying broker fees rather than percentage commissions 95% (91%).
AIRMIC's Andrew Cornish said: “The job of delivering complete broker transparency is not yet done, but our members are telling us that there's been a turnaround in the position compared to 18 months ago. We haven't quite reached the promised land, but it's in our sights.
“We remain concerned that these benefits are available mainly to the large, knowledgeable buyers; smaller companies are not always receiving the same consideration from their brokers. There seems to be a two-tier market emerging, which if it persists could result in much of the good work we have seen so far being undone.”
AIRMIC chairman Peter Berring added: “There appears to be an undercurrent in the SME market to continue with undisclosed contingent revenue arrangements, which could be seen to disadvantage those brokers who are moving toward full transparency.“
“Transparency increases efficiency and ultimately the value of the service provided. Disclosure often results in changed expectations on the clients' side, not always to the brokers' benefit in the short term, but over time these results show that it creates a far more sustainable business model.”
