Ensuring the future of the commission model is vital to underpinning a healthy broking sector and to preserving the practice that gives customers access to free, independent advice before they enter into a contract of insurance, which by its nature is a complex undertaking.
Why the commission model leads to better customer outcomes
Last year, BIBA issued a guide on why commission as a form of remuneration works because it preserves the principle that consumers and businesses have access to professional, regulated advice at no cost before buying an insurance policy. Any moves to force insurance brokers to a fee model may drive advice out of the market, as happened in the financial advice sector where the ban on commissions means that only 8% of adults seek advice as opposed to more than 40% before the ban.17 Seemingly simple products such as home, motor and travel are in fact complex and advice is often needed to avoid poor customer outcomes. Brokers are committed to following fair value rules as required by the FCA to ensure that their commission earnings reflect the work they do plus a reasonable margin to allow them to grow in their business.
Access to insurance
Having a broker to advise can be hugely beneficial especially when it involves a customer who is vulnerable or has unique needs. It is in this context that the work of our Access to Insurance Committee and our Find Insurance Service is so important. We are proud of the four key signposting agreements that we helped establish so that customers get the insurance they need via a broker.
+ Agreement on Age and Insurance covering motor and travel
+ Travel Medical Directory to help customers with pre-existing medical conditions and disabilities find suitable travel insurance.
+ The Flood Insurance Directory
+ The Voluntary Protection18 Insurance Signposting Agreement for people with pre-existing medical conditions and disabilities.
In addition, we are a signatory of the Armed Forces Covenant where we help forces personnel and their families access home and motor insurance.
Getting access to the right insurance products that meet the needs of the customer speaks to the value of a broker. The pandemic and the cost-of-living crisis have made many in society more vulnerable; the role of advice has never been more important. Our specialist brokers work hard to find suitable products that perform as the customer expects.
BIBA’s Find Insurance Service
helping people & businesses
Case study
Georgina – Business start up
Georgina, a 28-year-old freelance photographer, was launching her business and needed insurance to protect her equipment and meet client requirements for securing work.
Initially, Georgina struggled to find appropriate insurance. She explains: “There were so many options online, but they were either too expensive or didn’t fit my needs as a new business owner in the creative sector”. She continued: “I even gave up at one point before trying again.” This struggle meant that, despite her readiness to begin taking on clients, her business launch was delayed by the difficulty of finding suitable cover.
Through a family member, Georgina discovered BIBA’s Find Insurance Service, which quickly found a specialist broker to secure the insurance she needed to launch with confidence. “In my line of work, insurance is essential,” she says. “Many clients won’t hire you without it.”
Case study
Insurance for climate and sustainability professionals
Dave is a climate, cleantech, innovation and sustainability consultant and practitioner. He’s spent nearly a decade and a half working across these arenas in industries ranging from financial services to health and wellness, to space.
When looking for business insurance, Dave sometimes struggled to fit into the different categories of work that insurers typically have – so he sought BIBA’s help. “I remember once talking through the work I was doing with a large insurer over the phone: apparently struggling with the categories available on their system, they asked: ‘so, could that be… air conditioning..!?’”.
Dave reached out to BIBA’s Find Insurance Service and was transferred to a specialist broker, LBH Insurance, who has been able to meet his needs. “BIBA, the brokers and the insurers have all been absolutely brilliant. Consider how many challenges in the world today can be understood in terms of risks of harm and loss, and the importance of better understanding and reducing that risk whilst moving forward. This can apply to everything from action on climate and nature, to ensuring more decent and just lives for people, and even the sustainable development of very complex, high-stake industries ranging from space exploration to advanced energy and resource technologies. So, it’s great to see the insurance industry taking more leadership here. Keep on keeping on!”
Case study
Surface water flooding
In January 2019, Andrew, 64, who lives on the North Downs in Kent, experienced a flood when exceptionally heavy rain caused surface water flooding from nearby roads, which blocked his property’s drains. As he described “the garden filled up with water, and then it flowed in through the front door.”
The damage from the flood amounted to £13,197. Following his claim, Andrew’s premium increased by over 50%, prompting him to search for more affordable options. BIBA’s Flood Insurance Directory provided two specialist brokers who could meet his needs. Andrew was particularly impressed with the prompt, personable, and effective assistance provided by Daines Kapp Insurance Brokers. Despite the challenges of a claim and living in a flood-prone area, the broker secured a policy for around half the cost he had initially been facing. Andrew was highly satisfied with the level of service and felt reassured to have found such dedicated support during a difficult period.
Looking ahead, Andrew added: “I’m actually looking forward to the discussion this year… as it’s now five years since the claim” and he’s confident his broker will negotiate a further reduction.
Case study
Travelling with medical conditions
Sarah, dealing with topical steroid withdrawal (TSW) after receiving steroids as treatment for her eczema, needed European annual multi-trip travel insurance for herself and her boyfriend. TSW, a condition that can cause worsening skin issues after stopping steroid creams, is currently poorly understood due to a lack of research and no clear diagnostic criteria. This made finding insurance especially critical for Sarah, as she was vulnerable to sudden flare-ups and needed coverage in case of medical emergencies abroad. Without it, she risked being stranded without proper care, facing potentially huge medical bills.
After numerous rejections from other insurers, Sarah was recommended to BIBA’s Find Insurance Service, which connected her to All Clear Travel Insurance. The annual travel policy cost £107 and Sarah was relieved by the smooth, hassle-free process and praised the professionalism of the customer service team. Securing this insurance was crucial for her peace of mind, allowing her to travel confidently despite her health challenges.
After being diagnosed with a rare and complex allergy shortly before her holiday, Sarah even called All Clear a few weeks later to add her EpiPen to the policy, which only cost an additional £1.20. She has been so happy on her holiday that she has already booked another trip while still covered by her policy—Porto, here she comes! She hopes that others facing similar skin issues can still travel and experience the joy of exploring new places. Sarah highly recommended both BIBA’s Find Insurance Service and All Clear for providing the coverage she desperately needed.
Case study
Undiagnosed medical conditions
Morag booked her first visit to Paris to celebrate her 70th birthday in September 2024. However five days before the trip it was looking unlikely that she could get travel insurance because of an undiagnosed medical condition. Morag explained: “I have type 2 diabetes and high blood pressure but I’m also waiting for an appointment at the sleep apnoea clinic. Travel insurers said that because my diagnosis was pending that they couldn’t cover me for the new condition or for my pre-existing diabetes which was a real worry.”
Morag spoke to BIBA’s Find Insurance Service which put her in touch with specialist broker AllClear Travel Insurance. They offered her full cover for her pre-existing medical conditions while explaining that cover would not include a claim made specific to her as yet undiagnosed condition.
Morag added: “Within minutes BIBA enabled me to speak to a specialist broker who was able to provide exactly the type of cover I needed at a very reasonable price. I was surprised, relieved and delighted with this service BIBA offers, and feel more people should know about it. I will certainly use them again.”
Case study
Property held in trust
Steve faced a challenge when his insurer withdrew cover for a family property held in a trust, leaving him to find new buildings and contents insurance. The property, managed by a trust set up by his late mother and a firm of solicitors, had been covered for years, but finding a replacement proved difficult.
Many insurers and comparison sites rejected his application, providing no clear reason. As Steve put it: “I tried online and through phone conversations with a variety of insurance companies. They weren’t interested at all.”
Fortunately, Steve was referred to BIBA’s Find Insurance Service who found him a specialist broker experienced in covering trust-owned properties. The BIBA representative “was just asking the right questions,” making the process straightforward and quick.
Thanks to BIBA, Steve secured the necessary insurance and gained peace of mind. He highly recommends the service, especially for those with non-standard insurance needs, saying, “I wasn’t expecting it to be so straightforward.”
For more case studies please click here.
To Find a broker visit www.biba.org.uk/find-insurance or call 0370 9501790
Helping leaseholders
Solving the professional indemnity challenge and accelerating the pace of remediation
At the end of 2024, the Ministry of Housing, Communities and Local Government (MHCLG) reported that 9,000 to 12,000 buildings over 11 metres high would need fire-safety remediation. Of these, 4,771 buildings have been identified by Government, leaving up to 60% of affected buildings as yet unidentified. Of the 4,771 identified buildings, remediation work has yet to start on half and has been completed on around a third. Overall, work has been completed on only 12–16% of all buildings that may be in scope.19
One of the brakes on the pace of remediation remains the lack of skilled professionals who are able or willing to undertake the work, explained in part by a lack of affordable professional indemnity insurance for the work. BIBA presented ideas for solutions to the previous Government and has consolidated and updated these in a new positioning paper. Central is improving the environment in which construction professionals operate.
This includes the Government taking a lead by using standard forms of contract and reforming the joint and several liability regime to introduce a more proportionate approach to allocating liability among contracting parties. BIBA member Griffiths & Armour published an important thought leadership piece: Constructing Change: evolving the status quo or time to reset? You can read the Executive Summary below.
The Leasehold and Freehold Reform Act 2024
The Act as it currently stands only allows risk premium to be passed back to the leaseholder via the service charge. Secondary legislation will be introduced that will allow certain permitted insurance fees to be included in leaseholder service charges, chief of which should be insurance broker commissions and fees. This is important if we want specialist brokers to remain active in the sector and find the right insurance for freeholders and leaseholders on competitive terms. We believe that if this were not included in the secondary legislation, it will bring a series of unintended consequences, many of which could end up harming leaseholders – the very people this legislation sought to protect.
The MHCLG Pledge
This applies to buildings insurance for residential buildings over 4 storeys or 11 m in height with identified fire safety issues that require remediation. Current signatories to the pledge are listed on the MHCLG website and have made the following undertakings to Government:
1. We commit to stop the practice of sharing commissions with those parties who place/arrange buildings insurance. Those parties include property managing agents, landlords and freeholders. Note: The placer/arranger of insurance will need to determine their own charging arrangements.
2. We commit to having a cap on any retained commission of no more than 15% of the total premium (for all insurance brokerage work including any undertaken by parties on behalf of the broker) on buildings which have or have not yet been remediated.
3. We commit to disclosing our commissions to leaseholders in accordance with Financial Conduct Authority (FCA) regulations (as permitted to do so) if requested and work with third parties to deliver transparency on fees to leaseholders.
To sign your firm up to the pledge, click here
The buildings insurance challenge
Last year saw the welcome launch of the fire safety reinsurance facility arranged by McGill & Partners. This was the culmination of almost three years of hard work, by McGill, BIBA, the ABI and five participating insurers. It has helped make insurance for multi-occupancy buildings with fire safety problems more available.
The McGill fire safety reinsurance facility has created much needed risk capacity so that participating insurers such as us can offer solutions for tall, residential buildings affected by fire safety issues that require remediation. It is a good example of industry innovation and collaboration to solve a difficult problem and so deliver better outcomes.
Initial data indicates that the Facility is operating as expected and we continue to work with industry and government to support leaseholders across the UK who, through no fault of their own, are living in buildings with fire safety concerns.
17 European Economics, Retail Distribution Review, POst Implementation Review, December 2014
18 Life insurance, income protection insurance, critical illness insurance
19 National Audit Office Report November 2024: Dangerous cladding: the government’s remediation portfolio