Two-thirds of schemes brokers not satisfied with compliance support from insurers

The FCA introduced product governance rules in October 2021 which mean brokers and insurers must make sure products provide fair value for customers and that they can demonstrate this is the case.

Insurance Age can reveal that just over half (52%) of the brokers surveyed said they believed the new rules would benefit customers, but only 47% said it would lead to development of better products.

The FCA wrote a letter on 25 May to show its concerns on consumer harms. One key risk flagged by the watchdog was pricing practices and value for money.

The survey also revealed that just over half (57%) of brokers were satisfied with their insurer’s claims service. Despite this, fewer than one in six (15%) were considering moving their scheme to a new partner while 3% already had.

Brokers responding to the survey listed the main factors they looked for when deciding who to place schemes with.

The top response - 80% - was range of cover while price (79%) came second. Ease of access to decision makers at 76% completed the top three with risk appetite and claims promise rounding out the top five on 75% for both.

The specialist provider said the findings raised questions about whether insurers should be doing more to support brokers in achieving the right outcomes for customers.

Goal

Ecclesiastical’s corporate director Tony Fletcher, said: “The goal of any schemes relationship between brokers and insurers is always the customer. Ultimately, ensuring that they have the right product and right cover in place has to be the priority.

“The FCA has put a great deal of emphasis around this with the introduction of its product value rules. These clearly state their expectations in relation to products providing the right outcomes for customers. Given this focus it’s concerning to see that brokers need more from their insurer partners.”

Fletcher noted that while it was clear that there was some discontent among brokers about the service they’re receiving from insurer partners the findings showed that the majority were tolerating poor outcomes from their relationships.

“Brokers need to look beyond the ‘easy’ option and to find an insurer that understands the challenges they are facing,” he concluded.

“Settling for poor service will have a negative impact on brokers and customers in turn. A positive relationship with an insurer can benefit all parties.”

Research

The findings also detailed that almost half of brokers (45%) see schemes as a growth area.

The latest research was part of a series where Ecclesiastical previously revealed broker’s views on the real estate market.

That found the regional real estate market was in rude health, with six in 10 brokers (56%) reporting growth over the past 12 months, and one in six (16%) reporting significant growth.

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