BRUSSELS—European brokers will disclose to risk managers any remuneration they receive from insurers and potential conflicts of interest under a new transparency protocol agreed late last month.

The Federation of European Risk Management Assns. and the European Federation of Insurance Intermediaries, known as BIPAR, signed the nonbinding protocol that establishes a framework for broker disclosures to clients.

“It is very important that the industry came together on this difficult topic,” said FERMA President Peter den Dekker. “It's not to put a high burden on the brokers; that's to no one's advantage,” he said.

Instead, the agreement gives risk managers clarity on what fees their brokers receive from insurers and then allows buyers to decide whether those arrangements create a conflict of interest, Mr. den Dekker said.

Under the protocol, brokers agree to provide information on any pay they receive that is directly related to placing and servicing insurance when requested by clients. Any other payments made to the broker by an insurer also should be revealed on request, according to the agreement.

The protocol was not written to take a stand on whether contingent payments are good or bad, said Mr. den Dekker. “We want to have a right to ask for that information” and then decide whether it is proper, he said.

In a joint statement, Mr. den Dekker and Jaap Meijers, chairman of BIPAR, an organization of 46 broker associations in Europe with members that include units of the largest U.S. intermediaries, stressed that brokers “play an important role in the development, placement and servicing of business insurance contracts, and they should receive fair remuneration for their services. The amount and nature of that remuneration is a matter for the parties involved.”

Mr. den Dekker said FERMA has worked with BIPAR on the transparency issue for more than a year. Originally, FERMA wanted the disclosures to be mandatory, but agreed to voluntary disclosures to reach an agreement with brokers, he said.

“What this agreement does is give us a minimum standard of disclosure of what we would like our brokers to give us,” Mr. den Dekker said. The agreement is nonbinding, he said, because of the difficulty of crafting a protocol that would apply under the range of laws in European countries governing the brokerage business.