BRINGING IT TO THE TABLE
An important new BIBA/ABI working group has been set up specifically to focus on potential issues of conflict between insurers and brokers. Rachel Gordon finds out what it hopes to achieve.
Let the talking begin. As history has shown, starting a dialogue often brings the right results and this is the aim of a new working group, which brings together brokers and insurers to deal with difficult subjects that need bringing out into the open.
The need for a standalone group was first mooted within the General Insurance Brokers’ Committee (GIBC). Member Denis Morgan explains: “An increasing number of ‘friction issues’ raised by members with BIBA were being tabled at GIBC meetings. Given that GIBC meetings have limited time available and are ‘broker only’, it seemed a sensible move to set up a formal arrangement with insurers to jointly examine the uncertainties between themselves and brokers relating, in the main, to processes and understandings.”
Peter Staddon, BIBA’s Head of Technical Services who also sits on this group, added that many of the issues under discussion have been raised with him by BIBA members directly, but that insurance companies tend to have differing views in relation to resolving these issues. And, he believes it is important to have a consensus of opinion in this respect.
Apart from Denis, other broker representatives are Eamonn Browne and Glen Gillam. He comments “It’s very encouraging to see that both brokers and insurers are engaging to ensure that issues which equally affect them both can be addressed at an early stage with a view to there being an atmosphere of mutual trust. It’s all too common for either side to blame the other when issues arise. This initiative will undoubtedly make the industry more transparent and that will be good for the insurance buying public as well.”
Glen adds: “So often the focus from BIBA is on the big ticket issues but I’m hoping this is somewhere where we can make a difference to the day-to-day workings between brokers and insurers.”
Meanwhile, Eamonn – who for many years has sat on the BIBA Motor panel – is also committed to this new group. He comments: “Although we have a good relationship with insurance companies via our various technical committees, all too often the issues raised span more than one discipline whether it is motor, liability or property. This is an excellent way to exchange ideas and to address issues of practices which we are all committed to resolving.”
Denis continues: “We know that the ABI operates many committees where issues are discussed internally, as does BIBA; but where there is something that affects us both, it makes sense to have focused meetings where we could talk things through together and find a resolution. I know from speaking to members, that issues can sometimes create a great degree of frustration. The purpose of our group is to get to decision makers, clear up any misunderstandings and sort things out.”
Some of the issues are outlined in BIBA’s most recent Manifesto and this states: “BIBA’s General Insurance Brokers’ Committee will look to work constructively with insurers to find solutions for friction areas that can affect customers’ outcomes.”
The Manifesto refers to “products, underwriting, pricing, clarity of cover, operational effectiveness, remuneration, regulatory support, relationships including matters on distribution and agency, treating customers fairly, timeliness, terms of business agreement, access to authenticated claims information and dual pricing.”
Denis says: “We initially set out to examine the roles and needs of brokers and insurers – with a view to considering best practices relating to future relationships. We looked at the market background and dozens of key factors which affect our trading environment. It soon became clear why friction arises.”
The aim is for the group to become an established forum for brokers and insurers that can:
– Form cohesive industry positions on emerging issues
– Resolve areas of actual or potential friction
– Improve general communication between parties
– Improve external understanding of insurance distribution.
He adds: “We also considered future trading factors, including the potential for improved processes, technology and communication developments, as well as what we can anticipate in relation to future regulation, legal reforms and the political and economic environment. And, if you look at areas like providing data for the Employers’ Liability Tracing Office (ELTO), the way insurance premium tax (IPT) or changes to the Consumer Credit Act (CCA) are handled, insurers can deal with these in different ways. We want to see greater harmonisation. There has been a lack of communication in the past and we want to change this.”
BIBA approached ABI who contacted a number of insurers – Aviva, Axa, Brit, Groupama, Fortis and MMA agreed to participate, along with ABI representatives.
Peter Staddon pointed out that the make up of the group needed to include insurance companies who had a varied distribution mechanism, which is why he was pleased to see Aviva join.
Allison Andrews, Groupama’s Head of Commercial Distribution, chairs the group and explains why she decided to get involved. “When I first spoke to BIBA about joining, I was intrigued. At Groupama, we only distribute through brokers and so I felt this was a good way to find out in person what they are going through and to see how we can better support each other.”
She says one of the early issues on the agenda was the recent volcanic ash cloud which impacted on travel insurance. “Brokers want to be able to let their clients know what is going on and so it is important Insurers communicate our position clearly if we want to foster strong working relationships.
The ABI’s travel committee, for example, may already have had discussions and it is important that BIBA is kept up to date on what is going on. And, certainly for non-competitive issues, we would also like to see if we can get more agreement industry-wide.”
The group has met twice so far, and it is expected to meet quarterly. But, will it be prepared to take on the most sensitive issues? Allison points out: “We need to focus on issues that affect brokers generically. We could not discuss commission arrangements as they affect an individual broker, for example, or sort out individual grievances. Also, insurers will want to retain their own particular strategies in some areas and so we will not be trying to influence these.”
She continues: “I want to invest time in this project because I think it is going to be worthwhile. It is early days, and the proof of the pudding will be in the eating – but we should be able to make some real progress.”
And, Denis is quite prepared to ask difficult questions when required. He comments: “Given the objectives of the forum and the openness of the exchange so far, I am equally confident that Insurers will be frank with their replies – it is a breath of fresh air!”
He continues: “Having spent 27 years working for an insurer and the last 10 working within the broking market I have seen how conflicts arise from ‘both sides’ – it is often simply down to poor communication. I think many smaller brokers are now concerned that their voices are not being heard – I know we can make a difference. I am passionate about the future of independent brokers and so I was delighted to be asked to lead this project.”
He continues: “In a consolidating market which is becoming increasingly commoditised, I particularly wish to ensure that the value of the smaller broker is not lost. Accordingly we are seeking to objectively identify the value brokers currently add in the proposition – and what they could add in the future.
“We have already discovered that many issues are repeated from time to time and to avoid duplicating work, we have discussed the concept of creating a register of frictional issues – like a type of broker-insurer case law database – which could also record contact details for each insurer, for troubleshooting distribution issues. We are also prepared to tackle areas where we believe there is unfairness in the way insurers are dealing with brokers. There could also be TCF issues at stake, so we will also be focused on the policyholder’s position.
Denis concludes: “Smaller brokers need support now more than ever – and this new group should help to provide it. We would be very pleased to hear about any key market issues which should be sent to Peter Staddon at BIBA. If it is within our brief, we will address it. The insurers taking part have shown a willingness to get involved and I’m optimistic about what we can achieve.”