Brokers attack ‘misleading’ competition report
The Professional Insurance Brokers Association (PIBA) said much of the analysis did not contain evidence to support its views on the broker market.
The organisation also complained that the authors of the report had failed to collect any data from actual brokers.
In a presentation to the Joint Oireachtas Committee on Enterprise and Small Business yesterday, PIBA chief executive Diarmuid Kelly criticised the lack of a thorough consultative process, which had not allowed brokers a fair opportunity to respond to its preliminary findings.
The interim study, published by the Competition Authority in February, claimed brokers’ fees had risen at a faster rate than the actual costs of insurance in recent years.
It also concluded there was a lack of competition in the motor and liability insurance markets.
The PIBA has lodged a formal complaint with the Competition Authority and has sought a meeting with the Department of Enterprise, Trade and Employment, as a co-funder of the study.
“PIBA was left with the impression that having found little of interest to the general public on insurance companies that had massively increased prices and profits, the Authority decided to sensationalise their ‘findings’ on the broker market,” said Mr Kelly.
In particular, he complained of “highly flawed and misleading” statistics contained in a supplementary report on increases in broker rates and commissions. PIBA argued the issue of commission versus fees as payment method for brokers was largely irrelevant to increasing competition.
However, Mr Kelly told the committee that real competition could be encouraged by several measures including:
Stipulating that insurance companies make all schemes available to all brokers.
Insisting insurers always give written explanations for not granting or cancelling an agency.
Banning the practice of cancelling broker agencies on the grounds of business volume.
PIBA also expressed concern that there was widespread confusion about the new “multi-agency intermediary” classification introduced by the Irish Financial Services Regulatory Authority. It called for a return to the more simple definitions of broker, agent and tied agent.
Meanwhile, the Irish Brokers Association (IBA) told the committee that independent research conducted among its members had shown that 83% of personal motor insurance is placed with companies offering the lowest quote.
IBA president David Cowman said valid reasons lay behind each decision when business is not placed with the lowest quote offered to brokers.
These included customers disliking certain provisions of the detail in the lowest quote or concerns over issues like claims handling and excess payments.
