The British Insurance Brokers’ Association (BIBA) says future regulations need to focus on the sector’s limited risk exposure while reducing costs to intermediaries.

A research paper released last week at a reception in the UK parliament says brokers only have two significant risks of market failure – inadequate advice leading to the incorrect selling of products, and potential losses of client money.

BIBA believes this should be the focus of new regulation, not the current “costly and disproportionate” proposal.

UK brokers pay three times as much as the nearest most expensive European state, Ireland, which pays just 1% of direct and indirect regulatory costs.

BIBA Head of Compliance and Training Steve White says the research highlights how “out of line” the regulatory costs are in comparison to the rest of Europe.

“Not only are the direct costs such as the fees and levies the highest by a wide margin, but the indirect costs bear no relation to costs elsewhere in the EU,” he said.

The BIBA report also highlights brokers’ contributions to the UK insurance market, estimating both direct and indirect payments to be 1% of GDP, which is equal to other higher-profile sectors such as agriculture.

CEO Eric Galbraith says the research shows the new costs “can not be right or acceptable”.

“We are an important, valuable and low-risk sector and this should be reflected in a more appropriate and proportionate approach from the regulator,” he said.