The Federation of European Risk Management Associations (FERMA) and the European Federation of Insurance Intermediaries (BIPAR) announced that they have signed a protocol on the transparency of intermediation in business insurance.
Both federations said that they will “recommend their respective member associations to use this protocol as a guiding framework to enable them to agree and issue guidance on intermediary transparency on a national level.”
The bulletin set forth the following principles contained in the Protocol:
— Intermediaries should identify, manage and mitigate any potential conflict of interest in an appropriate and transparent manner. They should provide clear and fair information on the nature of their services and the capacity in which they operate, including any underwriting powers and delegated authorities they may hold from insurers, so that business clients can make informed decisions on the purchase of insurance products.
— They should voluntarily inform their clients about the nature of the remuneration directly related to the placing and servicing of the insurance contract, for example whether they are paid a fee or receive commission.
— They should disclose the amount of this direct remuneration on request from the client.
— Also on request from the client, they should give generic information about other types of payments they may receive from insurers if the business insurance contract of the client is part of the calculation of these payments.
BIPAR’s Chairman, Jaap Meijers and FERMA’s president, Peter den Dekker, jointly stated: “Intermediaries play an important role in the development, placement and servicing of business insurance contracts, and they should receive fair remuneration for their services. The amount and nature of that remuneration is a matter for the parties involved.
“In the complex nature of these business insurances, conflicts of interests can arise from time to time. When this occurs, intermediaries should identify, manage and mitigate them in an appropriate and transparent manner.
“FERMA and BIPAR recognise that the complexity of the business insurance sector can sometimes create a perception of a lack of transparency. This protocol addresses these concerns to underpin and enhance trust in the purchase of business insurance.”
Sources: FERMA and BIPAR