The British Insurance Brokers’ Association (BIBA) has warned that the regulatory burden imposed by the Financial Services Authority (FSA) on the insurance broking sector is a greater competitive disadvantage than the amount of corporation tax it pays.
The warning follows research launched by BIBA which has identified that the current regime appears disproportionate and inappropriate and that costs for brokers in the UK are three times higher than the next most expensive EU state.
Eric Galbraith, BIBA’s Chief Executive is calling on the government to ensure that the new financial regulator, the Financial Conduct Authority (FCA), puts the right regulation in place: “We have succeeded in persuading the policy makers that the insurance sector is not banking. Now we need to get them to understand that general insurance brokers and intermediaries are not insurers. We are not risk takers, we are risk advisors.”
“Our members are saying that the regulation burden is a greater competitive disadvantage than the amount of corporation tax they pay.”
Robert Brown, CEO of Aon Limited, a BIBA member, added: “We work closely with the regulators and have consistently argued that the high cost of regulation for brokers in the UK compared to our counterparts in Europe is evident and puts the UK at a disadvantage.”
Martin South, CEO of BIBA member Marsh UK, said: “Strong and proportionate regulation makes the UK a good place to do business. However, in order that the UK remains attractive, the level of regulatory oversight needs to reflect the fact that insurance broking does not pose systemic risks to the UK economy.”
Willis has also supported BIBA’s calls for the right regulation for insurance brokers. BIBA Board member and CEO of Willis UK & Ireland Brendan McManus said: “The latest research from BIBA shows that we have a great opportunity with the formation of the FCA to influence for the right balance of oversight from the regulator with the actual risks inherent in the UK insurance broking industry.”
BIBA has taken its research findings, new statistics show that general insurance brokers contribute 1% to GDP and that brokers only pose two risks to the regulator, to the Treasury and regulator to call for more appropriate, proportional and cost effective regulation of the sector.
Source : BIBA Press Release
