Den Dekker hopeful on broker transparency agreement

FERMA and BIPAR opened discussions a year ago after FERMA held its forum in Prague. The two groups decided to work together to find an industry solution to the problem to try and prevent the European Commission imposing a solution from above that would probably satisfy neither group. It has, however, proved to be a tricky negotiation process, not least because both BIPAR and FERMA need to win the support of numerous national associations before they can agree a deal. It is thought that FERMA is clear about what it wants to achieve and is helped by the fact that the member associations of the federation tend to represent similar and larger organisations that tend to have cross-border activities.hideBut BIPAR has possibly faced a more difficult task to find consensus because there are significant differences between practices and opinions amongst brokers from different countries and many of the national members will also be focused upon retail business. But an agreement will be needed soon as the European Commission is committed to deliver an update of the Insurance Mediation Directive (IMD) and asked CEIOPS for advice on how it could be improved in January. Transparency and the management of conflicts of interest was one of the key items that the Commission asked CEIOPS to look into as it stated that it wanted to ‘improve legal clarity and certainty.’ “The Commission intends to introduce more transparency on the way intermediaries are being remunerated as well as on mechanisms to ensure effective management of conflicts of interest,” stated the letter that requested advice from CEIOPS from Jörgen Holmquist, Director General of the Internal Market and Services Directorate, to Gabriel Bernardino, Chairman of CEIOPS. The Commission asked CEIOPS for advice by the summer but there is no sign of that yet and it is thought that it will hold a public hearing in Brussels on the matter shortly. Time is therefore running out for FERMA and BIPAR to find an industry solution. Mr den Dekker indicated during this week’s FERMA presidents’ meeting in London that the two groups may be able to make the deadline. “FERMA is trying to get something in place with BIPAR where the main issue is transparency and the management of conflicts of interest and we are not far from reaching an agreement,” he said. “I can tell you that this will assist insurance buyers in their discussions with brokers. This is needed because we have to educate ourselves to have proper risk management in place,” he continued. Mr den Dekker reminded delegates at the meeting that this is exactly the role that FERMA has to play at the European level and is why it needs as much support from national associations and members as possible. “This is the role that we play at the European level just as it occurs at a national level such as in the UK where buyers in the survey published today reported over 80% satisfaction levels with transparency. This is because of the work that AIRMIC has done with the Financial Services Authority. It helps educate the market,” added Mr den Dekker. Overall the FERMA survey, published this week at the meeting, found that member satisfaction on transparency had improved markedly from the last one published in 2008. It found that some 55% of respondents now believe they have transparency on broker remuneration compared with only 30% two years ago. The ‘don’t know’ replies dropped from 14% to 2% and the ‘no’ response was only 3%. Régis Demoulin of AXA said that this is thanks to a combination of regulation, lobbying by national and local associations and direct pressure applied to the brokers by the buyers. But he also said that ‘100% yes should be the only acceptable answer’.

Den Dekker hopeful on broker transparency agreement

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