The Federation of European Risk Management Associations (FERMA) and the European Federation of Insurance Intermediaries (BIPAR) have signed a protocol on the transparency of intermediation in business insurance.
Both federations have recommend their respective member associations to use the new protocol as a guiding framework to enable them to agree and issue guidance on intermediary transparency on a national level.
The principles of the protocol include intermediaries should identify, manage and mitigate any potential conflict of interest in an appropriate and transparent manner.
Intermediaries 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.
Intermediaries 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 and they should disclose the amount of this direct remuneration on request from the client.
Intermediaries should give generic information about other types of payments they may receive from insurers on request from the client, if the business insurance contract of the client is part of the calculation of such kind of payments.
BIPAR chairman Jaap Meijers and FERMA president Peter den Dekker said in a joint statement 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.
“FERMA and BIPAR recognize 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,” the joint statement said.