At a glance
- Graeme Trudgill of BIBA talks to Zurich Insider about the theme of BIBA 2014, plans for its members and the challenges brokers are likely to face in year ahead
- Customers are going to be at the heart of brokers’ businesses in 2014
- BIBA undergoing strategic review to meet the challenges of the 21st Century, but continues to fight for brokers on a range of issues
The best insurance brokers are the ones that take their customers seriously.
By doing this, they also gain the trust of their customers, which is a priceless commodity especially as one of the tenets of the new Financial Conduct Authority (FCA) is that all financial services firms treat customers fairly within the regulatory environment.
And this is the reason why the theme adopted by the British Insurance Brokers’ Association (BIBA) for next year’s BIBA 2014 conference and exhibition is ‘Customer, Customer, Customer’.
Zurich Insider caught up with Graeme Trudgill, Executive Director of BIBA, to discuss this theme, as well as the trade body’s plans for its members in 2014 and the challenges brokers are likely to face in the year ahead.
Q: Why are you planning to focus on the customer so much at BIBA 2014?
A: For insurance brokers, we are the agent of the customer as well as the insurer and we have to be there to look after the customers’ interests and help them in a claim. We shouldn’t just look at our own issues because, after all, our issues are our customers’ issues.
Customers are the reason why we are all here, and the regulator repeatedly says to brokers that customers must be at the heart of your business. Having them at the heart of everything and at the heart of our conference is the way we want to go for 2014.
Q: BIBA 2014 is returning to Manchester after a stint at ExCeL in London. Why do brokers like the venue so much?
A: Manchester Central seems to be the venue of choice for brokers. It becomes a ‘broker village’ and you also have all the hotels round the venue. Other venues we’ve been to have not been as practical; this is easy to get to with train links and there is always a buzz. That is why we have committed for three years. It is the perfect fit.
Q: How is BIBA’s strategic review coming along?
A: Times are changing and we want to listen to and communicate with our members far more effectively by segmenting the membership by both size and location.
Whereas once we would have 12 regional members coming on to our General Insurance Brokers’ Committee, now we are going to have 48 members feeding into BIBA. It will mean more meetings for us but we want far greater engagement for our members and far more relevant engagement.
We have created five advisory boards. They are for smaller brokers; larger brokers; the London market and international members; one for networks, aggregators and MGAs; and finally the regional advisory board made up of regional chairmen. The chairman of each of the advisory boards will then get to sit on the main board plus the deputy chairman from the small brokers as 85% of BIBA’s membership are smaller brokers. What we are making sure is that all the different stakeholders of BIBA have a voice on the main board. These changes ensure BIBA is best placed to meet the challenges of the 21st Century.
Q: BIBA is constantly trying to raise standards among its brokers. What initiatives does it have in the pipeline for 2014?
A: Our members have told us that they want to raise standards, so we are looking at introducing a code of conduct or practice that will mean more than just being a member of a trade body.
At the moment, there are the Chartered Insurance Institute’s (CII) Code of Ethics, the CII’s Aldermanbury Declaration and the CII Chartered Broker Status. Then you have all the FCA requirements as well. There is a lot in that space. So, we are going to hold a consultation with our members in the 2014 to see if BIBA needs to be doing anything else in this area.
Q: You are also in the process of putting the final touches to your 2014 manifesto. What will be the key campaigning points for 2014?
A: A lot of the long-term issues will remain, such as the Financial Services Compensation Scheme and issues around motor and flood insurance. We want the industry and government to find a good landing place for these problems. But there will also be quite a few new topics, although a lot of them are still undergoing sensitive discussion with members.
Regulation is also another huge subject matter that never goes away. One thing we are currently looking at is the cost of regulation for our members. Three years ago, we conducted a study that identified that our members had the highest regulatory costs in the whole of Europe. It turned out that our members were paying three times more than the next most expensive nation.
So we are revisiting that, and this time we are going to look globally as well. Some of our bigger brokers have told us they have been put off investing here to a degree because of the red tape.
We will report our findings to government because, the FCA has an objective to promote effective competition in the interests of consumers and Martin Wheatley [the FCA’s chief executive] stated publicly at the 2013 BIBA conference his commitment to more proportionate regulation.
There have been a lot of regulations coming out of the regulator this year and brokers don’t want to take their eyes off the customer to focus on the disproportionate demands of Canary Wharf. We want to see the regulator treating brokers as the low-risk sector that it is, and not being shoehorned into a system that was created for the banks. It is not to say we don’t like regulation – we absolutely believe in it and want to keep the cowboys out – but the sheer cumulative effect of so many reviews imposed on members this year has been a burden.
Q: How do you see 2014 turning out for brokers?
A: I still think there will be massive competition that will keep rates down. Then you’ve got technology: online distribution – and within that mobile distribution – and social media that will all play quite a role. For instance, one of our larger personal lines brokers now gets a third of its business through Facebook, so you are seeing quite a changing marketplace.
There will also be consolidation, as ever, but hopefully we are going to see broker growth,. When we speak to our London market and our international brokers, they are seeing good levels of growth in certain markets.
For insurance brokers, we are the agent of the customer as well as the insurer and we have to be there to look after the customers’ interests and help them in a claim. We shouldn’t just look at our own issues because, after all, our issues are our customers’ issues
Graeme Trudgill, Executive Director of BIBA
Then there are the aggregator sites. Those firms who can engage with them have done quite well on the whole, but there are elements of aggregator sites we still have concerns about and are pleased that the regulator will be looking in this area.
At the end of the day, I think insurers get better returns from broker-led business. At least 60% of the products on some sites are from brokers so they play a relevant role, but our view is that it is still important to interact with the broker. You can perhaps get a quote from a site, but speaking to a broker is still a very sensible thing to do to see if the policy is suitable.
Q: Finally, looking further ahead, what other speed bumps lie in wait for brokers?
A: Europe is going to be the key battleground for us. The Insurance Mediation Directive II (IMD2) – will it, won’t it go through? Our stance is that we like the original version in its current form. But if it does get revised we will be pushing for BIBA’s current proposition – that brokers must disclose commission-on-request, as well as a level playing field with all other insurance sellers.
If, however, it doesn’t make it before the European parliament elections of May 2014, where half of the MEPs will probably change, everything could either be back on the drawing board regarding IMD2, picked up where it was left off or given up on completely.
It is a fascinating time. But we are very late in the process now. Another thing we could ultimately see is parts of the IMD2 making it into other directives.