There is a system of broker networking that looks to be heading for extinction after general insurance regulation. Insurance clubs, through which brokers group together to share views, ideas and information on the market – and in some cases negotiate deals for themselves with insurance providers – are likely to become less common.
In fact, depending on who you talk to, clubs sometimes appear to have been figments of our imagination all along. Some providers and networks even refuse to comment on the subject. One wonders if this is because it would not suit their purposes to admit to this low strata of competition. The issue here, of course, is what level of competition clubs represent. Probably not great compared with the strength of even the smallest network and insurer offering the comfort of kindly principal.
But competition is not the real issue. Clubs provide the opportunity for small brokers to gather together with their fellows, and with nobody else taking control (or fees). It is a pity the informality of insurance club gatherings is likely to fall by the wayside. They could be seen as the last vestige of real independence.
The mortgage, IFA and general insurance industries are all facing similar regulatory ties that will mean the days of best advice will soon seem gloriously under-policed. But experience shows that things have had to change. Insurance clubs have little chance of surviving those regulatory ties.
“The problem with informal groups of IFAs and brokers was always in terms of legal entity, authorisation and compliance. There are IFAs out there in association with each other,” says Peter Ransome, sales director at Mortgage Support Network.
“They had their own businesses and said: 'Why don't we band together and create a club so we can go to the providers and negotiate competitive commissions?' “They are few and far between, however, and the problem with associations is there is no legal entity involved. Who is responsible for best practice within the group?” If you see a group of intermediaries gathered together the importance of informal sharing and airing of views and experiences is evident.
As mortgage brokers find themselves merging and working more with IFAs and general brokers it is to be hoped that the essence of the insurance club will still survive into the FSA regime. But networks and insurers should be aware that it might just look like a group of business people having a friendly drink. In the face of the imminent change to statutory Financial Services Authority regulation of the general insurance market, insurance clubs would be a good way of keeping abreast of developments in the market. Intermediaries will be able to help each other get used to the new regime and help each other with ideas for increasing sales.
Q: Insurance and mortgage clubs – do they work and why should brokers take this route?
Peter Hamilton is head of protection marketing at Friends Provident
Whether insurance clubs work rather depends on how the term is defined. With large networks, brokers can benefit from the negotiating power that size brings. And there must be a question as to whether there is room for many of the smaller clubs with such competition around them – and how many of these will ultimately survive. Brokers should look closely at the origins – and likely longevity – of any insurance club they are considering signing up to.
Sue Wilkinson is interim head of life and health propositions at Abbey for Intermediaries
As to whether insurance and mortgage clubs work and whether brokers should take this route for their business or for networking purposes, mortgage clubs definitely have a place in the market as the larger buying power they offer can help intermediaries take advantage of special offers when meeting their clients' needs.
Paul Shearman is mortgage director at Zurich
Zurich will specialise in offering an appointed representative solution to advisers. We also intend to have an offer for directly authorised advisers although we see this as a secondary priority.
Payam Azadi is head of marketing and corporate relations at Mortgage Times Group
Insurance clubs are one option available to brokers wishing to continue to operate in the market. It is really an individual choice for brokers to decide whether or not to join an insurance club. Insurance clubs are the equivalent of mortgage networks for the general insurance industry. As to the question of whether insurance clubs work, this depends very much on the business model of each individual club, although there are two core requirements that brokers should demand of an insurance club they are considering joining: that the club should have in place a robust risk-based strategy and that there should be a transparent relationship between the principal firm and the appointed representatives.
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