British brokers have produced a guide to demystify commissions and dispel suggestions they should be removed or capped, while calling for a reprieve from further regulation after recent reforms.

The commissions guide, launched by the British Insurance Brokers’ Association at its annual conference in Manchester this week, highlights how the model helps customers access advice and explains the benefits to insurers through product distribution savings.

“Commission payments have been under the spotlight, but we wanted to highlight the significant advantages to both customers and the insurance market that this long-standing practice brings,” BIBA CEO Graeme Trudgill said.

“We think it’s important to give our members guidance on explaining the advantages of the commission model and what it represents in terms of the work brokers do for customers during the life of their policy.” 

Mr Trudgill says people approaching a broker paid by commission receive free advice without any obligation to buy, helping them find ways to increase financial resilience through insurance.

BIBA has also prepared a guide for members that arrange premium finance, which allows the cost of insurance to be spread over a year.

“Premium finance helps customers who, for whatever reason, prefer not to pay their premiums up front. However, there are costs to doing this,” Mr Trudgill said. “This guide helps to explain how premium financing works and why customers may need to pay more to spread their payments.”

Mr Trudgill told the conference in an opening address that new and demanding regulation has required significant resources from the sector, but broking is low-risk, does not pose a systemic risk and does not need “another stream of new regulation”.

Recent reforms have included the Financial Conduct Authority’s consumer duty, which he says is an overarching regulation that mirrors much of what a broker has always done for a client.

“We are run by qualified professionals and, importantly, we are the agent of the client,” he said. “So please give us a period of stability. Allow us to breathe, to focus on clients and new innovations.”

From Insurance News magazine: Former NIBA boss Phil Kewin reflects on his time in charge of the broker body