If brokers can’t get renewal transparency right, what else are they getting wrong? Branko Bjelobaba asks
The Financial Conduct Authority (FCA) has warned it will take action against general insurance firms who are failing to properly implement rules introduced to increase transparency and encourage shopping around at renewal time.
It is simple, providers must show last year’s premium on renewal documents so customers can compare it with the renewal quote.
It is clear from the FCA Business Plan, just published for 2018/19, that the regulator finds the whole matter rather worrying and has concerns that firms are failing to provide a rather basic message to consumers at renewal.
If the message has been given then it is buried in the pile of paperwork and is not prominent in any way when it should be. A key concern is that there is a failure to implement the requirement completely because firms cannot handle change management well enough – to me that smacks of laziness. Another issue is that there is insufficient resource in compliance/internal audit to meet the rules – it makes me ask, can’t people be bothered to spend money in this area?
If firms fail with this very basic requirement, what else are they not doing?
Are they ready for GDPR, IDD and SMCR which all happen very soon? What is your Conduct Risk and why are you good to do business with?
Are you a chartered insurance broking firm or do you actively encourage and support staff taking professional qualifications at the very least?
Integrity
Issues such as the above and renewal transparency go to the very core of the integrity of a broking firm.
Those doing their job properly have their customers’ best interests at heart and will want to ensure they have already shopped around, that what they are proposing is good for the customer, and have explained that the policy continues to meet their demands and needs and that the price is competitive. Of course, brokers are not influenced by any remuneration they may be receiving and have explained adequately the route to market.
Renewal transparency rules came in a year ago, so the market has had plenty of time to sort it, surely? Those failing can’t blame the weight of stuff coming from the FCA and thus having no time as plenty of others manage perfectly well.
If brokers have done their jobs properly there is nothing to fear – the message tells clients this and they are
free to shop around and compare cover and price. The days of the lazy broker are surely at an end?
The Business Plan uses the word ‘harm’ 112 times and the word ‘value’ some 35 times. Failing to advise customers of last year’s renewal premium could harm them and leave them to conclude that the value brokers bring to the relationship is minimal.
The onus is on brokers to prevent harm – against the customer and themselves – and prove they bring a lot of value at all times.
Branko Bjelobaba is managing director at compliance consultancy firm Branko Ltd
ia debates
Price vs quality. It is a debate the sector has gone over a million times before. Rules around renewal transparency threw it into sharp relief and there have been complaints that it causes customers to focus too much on the cost of a policy. However, it could be an opportunity for brokers to start the conversation around quality and that’s an opportunity that should not
be wasted.
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