Broker transparency falls short: FERMA

BRUSSELS, Belgium—Europe's risk management association has told the European Commission that the level of transparency of broker commissions remains "not entirely satisfactory."

The Federation of European Risk Management Assns., in its response to the European Commission's interim report on competition in the business insurance sector, said that disclosure of broker commission is "very uneven" across Europe.

Two years ago, Brussels, Belgium-based FERMA proposed a broker code of practice on commission transparency, but no brokers have yet signed up to that charter.

In its response to the Commission's interim report—which highlighted broker transparency as an area of concern—FERMA said that while many large brokerages have committed to transparency, many other brokers in the market still oppose the idea.

According to FERMA's response to the Commission report, where there is disclosure it frequently is vague and unclear, while contingent commission payments—whereby brokers are compensated by insurers on a volume or profit basis—rarely are disclosed to buyers.

The Commission is slated to publish its full inquiry findings in September.