BIBA launches guide to broker commissions

The British Insurance Brokers’ Association has launched a guide aimed at demystifying the commission model.

The new guide, launched today at BIBA’s annual conference, aims to help consumers and businesses understand the benefits to them of the commission model, which has been used for centuries. Further, it will help dispel suggestions that commissions should be removed or capped.

Alastair Blundell, BIBA’s head of general insurance, says: “We created this publication because we think it is 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.”

The new guide explains in detail the potential harm that could arise from abandoning the commission model including the removal of access to free advice for customers at point of sale based on the impact the Retail Distribution Review in 2012 had on access to independent financial advisors.

It highlights that the commission model allows brokers to help customers of all sizes regardless of an individual customer’s contribution, via commission earned to brokers’ overheads and expenses and explains how it benefits insurers through saving in product distribution.

BIBA CEO Graeme Trudgill (pictured) concluded: “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. In particular, the fact that people approaching an insurance broker who is paid by commission receive free advice without any obligation to buy will help anyone to find a way to increase their financial resilience through insurance.”

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