Review prompted by brokers’ “radically changed” business models, says FCA’s Simon Green
The Financial Conduct Authority (FCA) has confirmed it is launching a thematic review into broker conflicts of interest.
FCA head of general insurance and protection Simon Green told Insurance Times: “Insurance brokers’ business models have changed radically in the past 20 years.
“Some brokers have shifted from being straightforward distributors to product designers, underwriters and claims handlers, and an increasing number now take on many functions historically performed by insurers; this means that conflicts of interest may be occurring.
“This piece of work will help us test whether the essential everyday insurance products that those businesses need are designed and delivered fairly and will focus particularly on SME and microbusiness customers.
“We will look to trade associations such as Biba and Liiba [The London & International Insurance Brokers’ Association] to work with us collaboratively as this work progresses. We hope to deliver our findings, and final recommendations, by the end of the year.”
A range of insurers own brokers in the UK. In personal lines, for example, Ageas owns a portfolio of personal lines broking brands and Covéa is the parent of high street broker Swinton.
In commercial lines, AXA owns Bluefin and Ecclesiastical owns South East Essex Insurance Brokers and a stake in Lycetts.
Several brokers also own managing general agencies. For example, Gallagher owns OIM and Towergate owns Towergate Underwriting.
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