Commercial insurance intermediaries: Conflicts of interest and intermediary remuneration

Conflicts of interest are inherent in many general insurance intermediary business models. So it is important that intermediaries put in place effective control frameworks to identify, mitigate and manage the risk that conflicts arising within their business could damage the interests of their customers.

SME customers often have more complex insurance needs than retail consumers and our research showed that a large majority of SME customers expected to receive advice when using an intermediary to arrange their insurance. This indicates a degree of reliance and importance attached to receiving appropriate advice from intermediaries.

This FCA report summarises the findings of its thematic review which looked into whether insurance intermediaries serving small to medium-sized enterprises are able to effectively identify and mitigate conflicts of interest arising from their remuneration structures.

Topics covered:

- Control frameworks.

- Causes of conflicts of interest.

- What concerns do we have?

- Structure of intermediary businesses and revenue sources.

- Add-on insurances, premium finance and insurances.