British Insurance Brokers Association

Manifesto 2012
Protecting our future

About us
The British Insurance Brokers Association (BIBA) is the UKs leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers. BIBA membership comprises of just over 2,000 regulated rms having merged with the Institute of Insurance Brokers (IIB) in November 2011. Independent insurance brokers are the agent of the client and put the clients interests rst. Brokers provide professional advice to businesses and individuals, playing a key role in the identication, measurement, management, control and transfer of risk. They negotiate appropriate insurance protection tailored to clients needs. We are the voice of the insurance sector advising members, the regulators, consumer bodies and other stakeholders on key insurance issues. We also provide unique schemes and facilities, technical advice, guidance on regulation and business support and are helping to raise, and maintain, industry standards. We work closely with the Chartered Insurance Institute supporting their code of ethics, chartered status and access to training. We are committed to meeting the challenge of helping individuals and businesses accessing insurance protection. Our members employ more than 100,000 staff. 1 General insurance brokers contribute 1% of GDP to the UK economy, the same as the agricultural sector. 2 In 2011 through our Find a Broker service we helped more than 400,000 people to access insurance protection, both online and via the telephone. 1 80% of all general insurance commercial business is sold via an insurance broker. 3 56% of all general insurance is sold via an insurance broker including home, motor, travel, commercial and industrial policies. 3 We run the largest insurance conference in the UK.
Attributed to: 1 BIBA 2 The contribution of insurance brokers to the UK economy Report/Prepared by London Economics 3 ABI

The benets of dealing with a broker

What is an insurance broker?
General insurance brokers and intermediaries help millions of businesses and individuals nd suitable solutions to manage their risks and are regulated by the Financial Services Authority (FSA). Our members treat customers fairly. They will: Focus on the customers needs Make sure the customer understands what is, and is not, covered Make choices clear by advising of the range of products or services they offer Explain any professional advice they give clearly and honestly Clearly state the costs of the policy including any fees they may charge Provide clear information and documents as well as any help needed with the paperwork to make sure the policy is issued promptly Help the client get their claim paid

The benets of dealing with an insurance broker 3

Brokers are the agent of the client, they work in their best interests, providing advice, guidance and choice on a range of risk management services and insurance products. They can assist with identication, measurement, management and control of risk, arrange appropriate insurance solutions and represent their client in the negotiation of claims settlements. Insurance brokers have a tradition of innovation and ensure a competitive market which enables individuals and businesses to manage their risk and support a resilient society.

Mission Statement
To represent and protect the best interests of our insurance broker and intermediary members We strive to achieve this by: Promoting the services and the value of members contribution to the protection of our futures with advice, guidance, access to risk management and insurance solutions. Inuencing the relevant decision makers and policy writers that affect our sector. Maintaining and developing a stable business environment in which our members operate by keeping them informed of relevant issues, providing a forum for discussion and the exchange of non-competitive information. Supporting members both collectively and individually through a series of facilities and support services.

Campaigning issues
Empowering UK Consumers Empowering UK Businesses Empowering the Insurance Sector Empowering the UK to trade worldwide

Supporting a sustainable recovery in the UK

The economic crisis we have all experienced during the last couple of years is being followed by a very difcult recovery. Customers are understandably cautious about spending money, and government is necessarily engaging in retrenchment of the public nances. Difcult times make the need for our members services particularly pressing. Our members help customers access products and services which suit their risk management and insurance needs.

We are committed to working Promoting the joint BIBA/Cabinet with government, businesses, Ofce work which demonstrates regulators and consumers to help the tangible benet of having a ensure a sustainable recovery and business continuity plan which growth by: can help turn an unacceptable risk into one which insurers would Signposting individuals and write, leading to greater choice and businesses that are struggling competition. to access insurance towards a suitable insurance product will help Calling for immediate reform lead to growth in the UK nancial of the Financial Services Compensation Scheme (FSCS) services industry. to reduce the burden on general insurance brokers and encourage Creating competition, a healthy growth. The 50 fold increase to and appropriately regulated broker market will lead to better outcomes intermediaries FSCS fees in the last three years is a huge and unfair for customers and growth. We burden on our members. are calling on the new regulator to ensure a balance between the Working with government to need for consumer protection support the competitiveness and causing harm through overly and growth of the UK insurance intrusive regulation. market for internationally traded Continuing to champion the insurance ensuring the UK is an attractive place to do business. growth of trade credit insurance to assist UK and international Helping to create more sales particularly following the proportionate, appropriate and development with UK Export cost effective regulation. For Finance (formerly called the Export example with the regulators Credits Guarantee Department) Threshold Condition 4 adequate which now enables customers to resources, it is our view that if access cover through the broking the regulator requires rms to sector. hold more capital, that it should be on the basis of consulted Addressing signicant upon and costed rules, rather underinsurance concerns, which than a judgmental approach. will provide greater protection, Improvement to this could release improved growth and fewer capital to assist growth. disappointed claimants at the time when their need is greatest.

Empowering UK consumers
In these difcult times, consumers are sometimes putting cost before adequate levels of protection which could lead to them being under insured or even uninsured. Signposting consumers to insurance access Signposting will help direct those customers who nd it difcult to obtain insurance because of their particular circumstances, to suitable insurance providers offering appropriate cover, for example older travellers. BIBAs Find a Broker service already helps more than 400,000 customers a year to access insurance protection. We are working with the government to achieve a new agreement for signposting as part of the introduction of the Equality Act 2010. We are calling for the governments signposting service to be rolled out further. Suitable insurance Commoditisation of insurance has led to an unhealthy focus on price and a deterioration in the amount of advice sought by customers to obtain suitable cover. Our members can provide the necessary advice to ensure that consumers are suitably protected. Insurance policies are complex contracts and without advice there can be gaps in protection, for example a signicant number of landlords are understood to have a standard home insurance policy when in fact, this policy would be invalid as a commercial policy is required. We are calling for information and improved nancial education to be available through government departments, regulators and consumer bodies regarding access to and the benets of insurance advice from our members and promoting the value of suitable insurance protection.

Fraud Fairer premiums for The average cost of insurance consumers fraud to every innocent customer is We believe that a consumers 50 per policy per annum. 4 premium should be based on a fair assessment of the real risk that We will work with government they pose. and anti-fraud organisations including the Insurance We will continue to work with the Fraud Bureau to reduce government to look at improving misrepresentation and the cost of motor insurance. application fraud and will seek This will include issues around bodily injury claims, fraud, greater access to the DVLA uninsured driving, young drivers driver licence database to and clarity of cover. reduce motor insurance fraud. Ensuring online trading Accessing insurance delivers the right results for case Study customers Mrs Alcock and her husband We believe it is important that (76) were planning a holiday to consumers buying insurance over Tenerife. However they were the internet are aware of the key nding it very difcult to get travel facts and signicant exclusions insurance that would cover Mr that apply to their policy and that Alcock due to a heart attack he had in 1999. Mrs Alcocks current where prices are reported by 7 insurer had recently changed a website they must reect the their policy and were now no product criteria searched for. We will continue our campaign to ensure customers buying on the internet achieve clarity, certainty and appropriate insurance cover.
longer able to cover Mr Alcocks heart condition. They offered them insurance but this would exclude heart conditions. Mrs Alcock approached a number of other insurance companies and again all were able to offer cover to them but not for his medical conditions. Mrs Alcock was then recommended to contact our Find a Broker helpline who put her through to a specialist broker. The insurance broker was able to cover Mr Alcocks travel insurance including his medical conditions.

Attributed to: 4 Insurance Fraud Bureau

Empowering UK businesses
Having the right risk management and insurance programme provides security and peace of mind, enabling businesses to protect assets and liabilities and continue to trade if they suffer loss. Brokers throughout the UK are able to provide these solutions for their clients and in doing so, businesses are protected and are able to continue to develop and grow. Business interruption The riots during 2011 highlighted the importance to businesses of having comprehensive business interruption insurance. Brokers are able to advise on the correct cover for businesses ensuring that they are able to continue to operate and are supported in times of need. Business interruption is complex but essential and we are calling on the government and business organisations to raise awareness of this important area of cover.

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Business continuity BIBA research undertaken Fair treatment of businesses with the Cabinet Ofce shows It is unfair for nancial organisations that 62%1 of respondents said that those organisations with or lenders to pressurise customers a business continuity plan will into purchasing insurance benet from doors opening to new through their facility, restricting the insurance markets, a premium customers freedom to choose and discount or a reduced excess. access to independent advice. We will work with the government to promote the benets that resilience measures and business planning can provide to help support the growth of business in the UK. The practices of conditional lending, tying and bundling must be appropriately regulated and enforced to protect customers.

Attributed to: 5 Debarati Guha-Sapir, Centre for Research on the Epidemiology of Disasters, Brussels 6 Cunningham Lindsay 1 BIBA

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Catastrophes Underinsurance The UK has the highest economic During the economic downturn loss from ood catastrophes in many businesses have been Europe.5 The government holds cutting back on their insurance the responsibility in ensuring cover. Loss adjuster Cunningham prevention (e.g. through ood Lindsay says that out of a sample defences). We believe that not of portfolios that they valued enough is being done to help put they discovered underinsurance in place the preventative measures ranging from 50% to 70%.6 that will help develop a more resilient society. 57% of brokers have seen reductions in levels of insurance We will continue to work with protection for personal lines government and our members customers and 67% of brokers had to provide sustainable products seen commercial customers reduce to strengthen the resilience of our their level of insurance protection.1 society, maintaining the coverage for catastrophe risk insurance We will be raising awareness of particularly oods and storms the consequences of not having in conjunction with government suitable insurance cover and action on prevention. look to help businesses so that they are protected in We are calling for increased the event of a claim. cooperation in regard to ooding between the public and private sectors to help protect property owners, business growth and development in the UK.

Empowering the insurance sector

Reform of the UK regulatory The protection of client money architecture We believe the protection of client General insurance brokers money is paramount. contribute 1% of GDP to the UK economy and provide solutions We will work with the regulator to managing risks. to build upon existing client money requirements with a more Our members recognise universal approach to premium the need for regulation. To handling. We are aiming to give facilitate innovation and growth greater condence to clients, the we are calling for a more market and the regulator during the economic crisis. appropriate, proportionate and cost effective approach to regulation with specic regulatory consideration for general insurance brokers and intermediaries. Direct and indirect regulatory costs of insurance intermediaries in the UK and Europe
3.5%
Regulatory costs as a proportion of general Insurance Intermediation revenue

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3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0%

Indirect Cost Direct Cost

Source: Future regulation for insurance brokers/Charles Rivers Associates

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 Reform of the Financial Services Compensation Scheme (FSCS) We support customer compensation. The provision for compensation to customers plays an important part in increasing public condence in nancial services. However, the current unfair funding system of the FSCS has led to a 50 fold increase in fees during the last three years for insurance brokers.1

Case Study/example1 A member broker of BIBA, with 330 staff, paid the following FSCS fees: 2008 - 3,000 2009 - 16,000 2010 - 125,000 2011 - 150,000 Regulation by the new Financial Conduct Authority (FCA) This is an opportunity for better regulation. Regulation has a major inuence on our profession and we have long campaigned for more appropriate and proportionate levels of supervision. We are a strong supporter of the principle of better regulation and will continue to work to achieve this, including efforts to reduce unnecessary, unfair or inappropriate regulation. The cost of regulation to insurance brokers in the UK is three times higher than the next most expensive European state, Ireland. Independent research commissioned by BIBA identied that brokers only pose a low risk to the regulators objectives. Given the low risk posed by insurance brokers, we are calling for the new regulator, the Financial Conduct Authority to institute a revised regime that better reects this low level of risk and does not impose unnecessary costs and disproportionate supervision that sties growth in our sector.

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These inequitable increases, which are stiing growth have been caused by credit intermediaries who have mis-sold payment protection insurance and been unable to pay customer compensation. This has led to increased calls on the FSCS insurance intermediary sub-class, which our professional insurance brokers share with around 10,000 secondary sellers of insurance such as doctors, dentists, motor traders, vets and credit intermediaries. We will call on the FSA to separate professional insurance brokers from the secondary sellers of insurance and to end the practice of cross-subsidies as part of its review of the Financial Services Compensation Scheme during the rst half of 2012.

Attributed to: BIBA

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Adequate resources Professional indemnity (PI) It is our view that if the regulator insurance requires rms to hold more capital it PI cover provides an invaluable should be on the basis of consulted safety net to professionals. Our upon and costed rules, rather than PI initiative is leading reform in the judgmental approach that this important area for brokers currently exists. Improvement to to ensure better protection for this could release capital to assist members and their customers. growth. This by the back door approach to regulation without We will continue the initiative to consultation is disproportionate ensure our members can obtain and must be reviewed. optimum protection for their liability risks. We are calling for a review of the regulators threshold condition 4 adequate resources to improve clarity and support growth.

 Reform of insurance law Working with insurers We support the Consumer It is important for insurance brokers Insurance (Disclosure and and insurance companies to have Representations) Bill and its move a good working relationship and to create greater condence in the for customers to receive a positive insurance industry. outcome. We will work with the Law Commission to progress this bill and to develop other proposed changes to insurance law affecting business. Our General Insurance Brokers Committee will work constructively with insurers to deal with internal market issues to create a more effective and efcient outcome for clients. We will help by providing an issue register containing details of the points under discussion, to ensure clarity and the standards of professionalism are upheld. One key piece of work within this initiative will be to ensure that the new Employers Liability Database developed by ELTO (The Employers Liability Tracing Ofce) is incorporated as a more robust vehicle for the tracing of old employers liability policies in order that victims of long-tail disease claims can receive compensation.

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Empowering the UK to trade worldwide

We will work with the government to support the competitiveness and growth of the UK insurance market for internationally traded insurance. Making sure the UK remains at the forefront of the international insurance market. Europe We play an inuential role in promoting and protecting our members interests in Europe. We want appropriate European regulations and for them to be implemented proportionately. We are currently faced with a considerable number of directives and proposals. We will continue to play a full part within our European broker federation BIPAR. We will also engage proactively with the UK Government and the European Commission to ensure the most appropriate outcomes. The London and international market The London insurance market is the jewel in the crown of the UKs nancial services sector. The London market accounted for around 36.9 billion in gross premiums in 2010,7 almost all of which is produced by our professional insurance broker members, making it the worlds biggest market for internationally traded insurance. Our London Market Region Committee supports our view that we need the UK to remain an economically viable place to do business and the London insurance markets preeminence undiminished. We will work with the government and other bodies to ensure that the regulatory, scal and legislative environment does not affect adversely our members competitiveness. We will raise awareness about brokers activities and their importance to the UK economy. We will also work to identify and reduce barriers to growth for UK brokers.

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Attributed to: 7 TheCityUK

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Revision of the EU Insurance Trade Credit Insurance Mediation Directive (IMD) We will continue to champion the The IMD is the European directive growth of trade credit insurance that sets certain rules for insurance to assist UK and international brokers in the UK which are sales particularly following the implemented by the regulator development with UK Export the FSA. The IMD is currently Finance (formerly called the Export being revised by the European Credits Guarantee Department) Commission and we want to see which now enables customers to its broad scope maintained. It is access cover through the important that travel agents and broking sector. comparison websites are included, thus ensuring customers receive a consistent and appropriate level of protection wherever they buy their insurance. Reform is also needed to the current regulatory unlevel playing eld so that customers have access to the same suite of disclosures wherever they buy their insurance. We support the early views of the European Commission in its draft consultation and public hearing, including that remuneration should be disclosed upon request. We believe that addressing these issues will help to provide a level playing eld for insurance brokers and their customers in the UK and Europe. We call on decision makers within the European Commission to provide a level playing eld for insurance brokers and their customers through the reform of the EU Insurance Mediation Direction.

The various directives and their revisions that will have an impact upon insurance brokers

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ADR Prof. Qualications Sanctions Ucits

IORP Corporate Governance Solvency II

Gender Equality

Public Procurement

Consumer Rights

ESAs

Insurance Mediation Directive (IMD)

E-Commerce Directive, Anti Money Laundering, Collective redness, Distance selling

VAT,(FAT),FTT,IPT Insurance Intermediary

Contract Law Credit agreements relating to residential property

PRIPS

Insurance Guarantee Schemes Investor compensation scheme

+New Regulatory instruments/procedures/ESAs

MiFiD2

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How brokers help with claims

Settling claims is a principal outcome of what our members do. Brokers can add value in the claims process, helping clients to obtain a fair and prompt settlement from insurers. In research on behalf of BIBA 93% of broker respondents said that they regularly negotiate up to a 20% uplift on claims settlements1. Case Study An architect faced a claim from his client for allegedly supplying documents and information late which lead to delays on a construction project. Insurers initially sought to decline the claim for late notification, non-disclosure at renewal and because the architect had admitted liability for part of the claim. In addition there was a dispute as to whether the various allegations against the architect amounted to separate claims under the policy which would each attract a separate excess. The insured was potentially facing an uninsured loss of 160,000. The broker engaged in lengthy discussions with the insurers on the policy coverage issues. Insurers ultimately accepted that the non-disclosure had been innocent and that the admission of liability had not caused them prejudice. They also, following negotiations, accepted that only one policy excess should apply. The claim was settled in full by the insurers, which is unlikely to have been the case without the expert representation of the brokers claims team.
Attributed to: 1 BIBA

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OUR EXECUTIVES
Eric Galbraith 020 7397 0201 galbraithe@biba.org.uk Barbara Bradshaw 01933 410 003 bradshawb@biba.org.uk Lindsay Campbell 020 7397 0221 campbelll@biba.org.uk Leighann Forsyth 020 7397 0223 forsythl@biba.org.uk Steve Foulsham 020 7397 0234 foulshams@biba.org.uk Graeme Trudgill 020 7397 0218 trudgillg@biba.org.uk Steve White 020 7397 0222 whites@biba.org.uk Kirsty Wingrove 020 7397 0224 wingrovek@biba.org.uk

OUR STAFF
CommuNicatioNs Becky Pledge 020 7397 0231 pledger@biba.org.uk Corporate Affairs Nicola Martin 020 7397 0200 martinn@biba.org.uk Membership Sunel Victor 020 7397 0205 victors@biba.org.uk RegulatioN Vannessa Young 020 7397 0233 youngv@biba.org.uk TechNical Services Doreen Campbell 020 7397 0219 campbelld@biba.org.uk Ann Peel 01933 410 003 peela@biba.org.uk CoNfereNce Katie Reay 020 7397 0248 reayk@biba.org.uk AccouNts Gurmukh Shehri 020 7397 0214 shehrig@biba.org.uk Joelle Etienne 020 7397 0249 etiennej@biba.org.uk Sharon Beckett 01933 410 003 becketts@biba.org.uk AdmiNistratioN Barbara Johnston 01933 410 003 johnstonb@biba.org.uk Alison Bradshaw 01933 410 033 bradshawa@biba.org.uk Mary Simmonds 01933 410 003 simmondsm@biba.org.uk

OUR REGIONS
ScotlaNd aNd NortherN IrelaNd Clive Hurn 07584 708558 hurnc@biba.org.uk Yorkshire aNd NortherN Ian Raper 07584 708562 raperi@biba.org.uk Merseyside, North Wales, West Cheshire & Isle of MaN aNd Greater MaNchester Bob Nicholls 07584 708563 nichollsb@biba.org.uk East MidlaNds aNd ANglia Kay Doyle 07584 708561 doylek@biba.org,uk West MidlaNds Sue Dimmock 07584 708594 dimmocks@biba.org.uk West of ENglaNd aNd South Wales Barry Blakley 07584 708559 blakleyb@biba.org.uk CeNtral aNd South East Diane Smyllie 07584 708556 smyllied@biba.org.uk LoNdoN Market RegioN Vannessa Young 020 7397 0233 youngv@biba.org.uk

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Contacts

Regions
A Scotland D Yorkshire and Northern E  Merseyside, North Wales, West Cheshire and Isle of Man F Greater Manchester G East Midlands H West Midlands I West of England J South Wales M Central N Anglia S London Market T South East U Northern Ireland

BIBA regions

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D F E H N J M I T
S

British Insurance Brokers Association 8th Floor John Stow House 18 Bevis Marks London EC3A 7JB Find a Broker helpline: 0870 950 1790 Member Helpline: 0844 77 00 266 Fax: 020 7626 9676 enquiries@biba.org.uk www.biba.org.uk Follow us @bibabroker BIBA broker Group BIBA

Eric Galbraith Chief Executive 020 7397 0201 galbraithe@biba.org.uk Graeme Trudgill Head of Corporate Affairs 020 7397 0218 trudgillg@biba.org.uk Leighann Forsyth Head of Communications 020 7397 0223 forsythl@biba.org.uk

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