Raising broker commission transparency is an area the UK regulator will eventually focus on, according to the Association of British Insurers (ABI).

Commercial clients may not be aware that current Financial Conduct Authority (FCA) regulations require brokers to disclose commissions on request, or even if they do, they may not have exercised it in practice.

“In a world where SME customers are treated in a similar way to personal lines consumers from a regulatory perspective, in my view, it is only a matter of time before the FCA starts to ask questions about the transparency of broker remuneration,” ABI Director of General Insurance Policy James Dalton said.

“Is it right that the burden is on the customer to ask rather than on the broker to disclose upfront? And if brokers have nothing to hide from their customers, then what is the problem with increased and proactive transparency?

“These are not really questions for me to answer. But in the context of a discussion on the regulatory and reputational challenges of the future, it is impossible to ignore the [general insurance] distribution landscape.”

The ABI sees increasing transparency as crucial to improving the industry’s reputation, but it will not happen overnight.

“Talking about improving the industry’s reputation is easy. Taking action is more challenging,” Mr Dalton said.

The ABI will launch a new consumer guide to home insurance this week as part of its overall plans to improve industry transparency.

“This will be the latest in our proactive, consumer-centric campaigning work and improving the industry’s reputation is an important underpinning of it,” Mr Dalton said.

He also weighed in on what an EU exit would mean for the UK insurance industry, the largest in Europe and third biggest globally.

“Our membership of the EU guarantees the right to do business in 27 other member states on an equal footing,” Mr Dalton said. “Make no mistake about it, the UK insurance industry benefits from Britain’s membership of the EU.”

The UK will vote on whether to stay or leave the EU in a referendum next week.