UK regulator launches insurance broker inquiry
The Financial Conduct Authority (FCA) has launched a market study to assess how competition is working in the wholesale insurance broker sector in the UK.
There have been significant changes in the wholesale insurance sector in recent years which has seen brokers developing new services and business practices, according to a Nov. 8 statement. The FCA plans to explore how competition is currently working and whether it could work better.
“Given the size of the wholesale insurance sector and the type of large-scale risks it covers, the way it functions can have a wide-ranging impact on the broader economy. If businesses cannot get appropriate cover or pay more for services than they should, it can impact on their ability to operate and grow,” said Christopher Woolard, FCA executive director of strategy and competition.
“Brokers play an important part in the wholesale insurance sector ensuring clients get appropriate coverage at good value. However, following significant changes in the sector, we are looking at the dynamics to ensure competition is working well.”
The study will look at how brokers compete in practice and whether they use their bargaining power to get clients a good deal. It will assess what conflicts of interest exist, how they are managed and how they affect competition and client outcomes. Furthermore, the study will examine how broker conduct impacts on competition in the sector.
The FCA wants to ensure that the sector is working well, and fosters innovation and competition in the interests of its diverse range of clients, according to the statement.
The London insurance market is one of the world’s leading centres for large scale, complex commercial and specialist risks, controlling more than £68 billion in gross written premium.
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