The British Insurance Brokers’ Association (BIBA) warned MPs and Lords today that its members’ cost of doing business had risen far beyond rival countries and must be brought under control.
BIBA unveiled initial findings of its regulation research today, declaring that insurance brokers in the UK have the most expensive regulatory regime in the world, with regulatory fees and levies costing more than five times those in New York, Japan, France and Germany.
Launching its 2014 Manifesto Delivering for customers at a reception in the Houses of Parliament to an audience of Ministers, MPs, Lords, senior government officials, brokers and media, BIBA CEO Steve White listed a range of statistics to outline his case, including:
- 53% of members stated that they have either delayed or cut investment and 40% reported a reduction in expansion as a result of fees to the Financial Services Compensation Scheme.
Members have seen a fifty-fold increase in their FSCS fees during recent years, primarily due to mis-sold payment protection Insurance policies from secondary intermediaries
- The cost of regulation for small brokers in the UK has increased from 3% three years ago to 4% of income now.
- Large brokers pay fourteen times the global average cost in comparison to other nations
The full cost of regulation report will be published in Spring along with the indirect regulatory cost comparisons.
Steve White added: “Having the most expensive fees and levies in the world puts UK brokers at a disadvantage and is disproportionate to the low risks that they pose to the regulator’s objectives. Our new Manifesto outlines our calls for action to tackle this. We will work with the Financial Conduct Authority on the review of its funding to find a more equitable system and will continue to fight for a fairer separate sub-class within the FSCS for pure insurance brokers.”
Outlining BIBA’s commitment to working with Government to deliver better outcomes, Steve White, BIBA’s Chief Executive, said: “This year is a year of delivery for the Government and in this document we set out our campaigning issues for 2014. We outline where more can be done to help consumers and their families, support businesses that provide vital employment and help the insurance industry itself – which plays such a critical role in driving growth.
“The Manifesto which was compiled following extensive consultation with members is our calling card to engage relevant stakeholders. It ensures that we are at the heart of representing brokers on the issues that matter most to them. It allows us to quickly and concisely deliver our messages – it also emphasises the importance of general insurance brokers to the UK economy.”
The key issues in the 2014 Manifesto include:
- Delivering access to suitable insurance protection
- Delivering a competitive regulatory system
- Claims – Improving public understanding and enhancing the customer experience of the claims process
- Supporting SMEs
- Creating a level playing field for distribution
- Tracking and measuring insurance premiums
The association had a busy afternoon in terms of announcements, also launching the new BIBA-Acturis Price Index. The index shows that average premiums for an SME insurance ‘shopping basket’ have increased by 11.5% since 2010. The consumer ‘shopping basket’ is 7% higher than 2010 levels but is showing signs of a downward trend with a 2% decrease in 2013. The third basket for larger commercial shows that average premiums have been mostly flat since 2010.
Graeme Trudgill, BIBA’s Executive Director, said: “This index is important, it will help us to identify where and why insurance costs are increasing for small businesses and consumers. BIBA can then work with the Government and industry, and brokers can work with their customers, to achieve affordable premiums for customers.”