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Earlier this month the Financial Conduct Authority (FCA) said it had identified “significant potential for harm to customers arising from the product development and distribution approaches currently employed in some sectors of the GI market and by some GI firms.” For the British Insurance Brokers’ Association (BIBA), the guilty ones – or this portion of the industry referred to by the FCA – aren’t from its ranks.
In a belated response to the general insurance (GI) distribution chains report released by the regulator, BIBA pointed to where it believes the troubles are coming from, adding that industry-wide “there does not seem to be a problem.”
In a statement sent to Insurance Business, BIBA commented: “Looking at the examples in the FCA paper, the issues seem to be arising from the secondary sellers; the report provides examples including car showrooms, mobile phone sellers, and tour operators.
“We are pleased that the FCA highlights that it is important to note that there are also many other GI distribution chains and products delivering good value insurance products and appropriate outcomes, with no evidence of harm.”
The trade body expressed its confidence that it’s these other insurance distributors – and not the likes of BIBA’s members – that might not be putting the consumer’s welfare ahead of their own.
“It is our strong view that as agent of the customer, insurance brokers have always acted in the best interests of their customers,” stated BIBA. “Now with the Insurance Distribution Directive it should be the case that any distributor of insurance products must also act with the customers’ best interests.
“We note that the FCA has raised concerns about evidence indicating that customers may be sold sub-standard or ‘hollowed out’ products. Our strong recommendation is that when a secondary seller is offering an insurance product that customers benefit from a second opinion by seeking the advice of an insurance broker who can advise on a range of products and prices to suit their needs.”
Meanwhile fintech firm Altus has also offered insights following the watchdog’s warning to GI businesses.
Consultant Mark McDonald said in response: “It’s a positive that the FCA has published this report, both from a consumer point of view and the insurance industry perspective. As an industry it’s imperative to be able to sell relevant products that are appropriately priced to consumers who have a need for the product.”
McDonald believes highlighting the current models’ pitfalls is only the first step.
“The next is for insurers to re-evaluate their approach in those areas where they can improve the outcome for consumers,” he noted. “To do this effectively, organisations must improve their controls, measures, and processes to ensure customer-focused outcomes.”
