BRUSSELS—European regulations should include binding standards of transparency between brokers and insurance buyers no matter the size of risk involved, the Federation of European Risk Management Assns. says.

In its response to the European Commission’s consultation on potential revisions to the E.U. Insurance Mediation Directive, FERMA said Tuesday that it believes broker disclosure of their remuneration should be mandatory.

The consultation, which the European Commission launched in November and completed last month, was due in part to the “patchwork” of national regulations that have emerged across the European Union since the directive was incorporated in member states in 2005.

In addition, the commission said it wants to review the directive in the light of Solvency II, the risk-based capital regulatory regime for insurers and reinsurers in Europe that is slated for introduction in 2012, and to revise it “to extend the benefits of a risk-based solvency regime and increased transparency rules to policyholders.”

In its response to the consultation, FERMA said that—at buyer request—brokers should disclose the amount they have been paid to place and service each contract as well as any indirect forms of payment from the insurer connected with the business being placed.

FERMA, which represents 19 national risk management associations across Europe, noted that late last year that it signed a protocol with the European Federation of Insurance Intermediaries, known as BIPAR.

While the protocol shows that consensus between corporate insurance buyers and brokers is possible, FERMA said it is not legally binding.

“The review of the (directive) represents, therefore, a unique opportunity to incorporate undisputed standards of transparency into binding European legislation,” FERMA said in its response to the commission.

Last month in its response to the consultation, the Brussels-based Comité Européen des Assurances said that if the European Commission decides to take steps to improve the transparency of broker pay, “an appropriate solution would be to ensure that the customer is informed upfront about the form and source of the intermediary’s remuneration.”