2017年-FCA英国金融行为监管局_ms17_2_1_30页_756kb

Summary of Wholesale Insurance Broker Market Study

Core Content

The Financial Conduct Authority (FCA) has initiated a market study to examine the competition dynamics within the wholesale insurance broker sector, which is a critical component of the London Insurance Market. This market is responsible for placing and underwriting large-scale, complex, and specialty risks, controlling over $91bn in gross written premium (GWP) in 2015. The study aims to assess whether competition is effectively serving the interests of clients and whether the sector is evolving in ways that may be detrimental to market integrity.

Main Topics

The study will explore three key areas:

Topic 1: Market Power

• The FCA will assess whether individual broker firms possess significant market power that could distort competition.
• They will examine the ease of entry into the sector and whether certain sub-segments have fewer active players, leading to reduced competition.
• The impact of market power on pricing, service quality, and client choice will be considered.

Topic 2: Conflicts of Interest

• The FCA will look into potential conflicts of interest that arise when brokers prioritize their own remuneration over the best interests of their clients.
• This includes the possibility of brokers directing business to facilities that offer higher commissions, even if it is not optimal for the client.
• They will also evaluate business practices that may exacerbate these conflicts, such as channeling business to in-house underwriting services or placing risks with insurers that purchase additional services from the broker.

Topic 3: Broker Conduct

• The FCA will investigate how broker practices influence competition in the underwriting sector.
• They will consider whether brokers are excluding certain types of insurers, particularly smaller firms, from business opportunities by using facilities.
• There will also be an assessment of whether there is evidence of coordination between firms, even if informal, that may affect market dynamics.

Key Information

• The London Insurance Market is a global hub for complex and specialty risks, with a significant portion of business originating outside the UK and Ireland.
• Brokers play a crucial role in advising clients and placing risks with appropriate insurers, often leveraging their extensive knowledge and relationships.
• Broker remuneration includes standard commission, additional commission, work transfer commission, facility-related commission, and other fees, which may influence placement decisions.
• The use of facilities has increased, offering enhanced remuneration and potentially affecting competition and client choice.
• The sector has experienced a prolonged soft market, with declining premium rates, which has impacted brokers' earnings and led to the development of new services.

Scope of the Study

• The study will assess the effectiveness of competition in the wholesale insurance broker sector.
• It will examine how brokers influence competition in the underwriting sector and whether the industry allows innovation and fair competition for clients.
• The FCA will gather data and insights from insurers, brokers, and purchasers of insurance policies in this sector.

Next Steps

• The FCA will publish an interim report in autumn 2018, including preliminary conclusions and potential remedies.
• They will consider feedback on this report and incorporate it into their final findings.
• If competition issues are identified, the FCA may intervene through rule-making, guidance, self-regulation, or enforcement action.
• They may also decide not to take further action if concerns are not significant or are expected to be addressed by other means.

Regulatory Context

• The FCA has the authority to investigate market conditions and take regulatory action if competition is not working effectively.
• They may refer issues to the Competition and Markets Authority (CMA) for further investigation.
• The study is part of the FCA's broader market study powers and procedures, which are outlined in their guidance.

Conclusion

The FCA recognizes the importance of effective competition in the wholesale insurance broker sector, as it can significantly impact the broader economy. The study aims to ensure that the sector continues to function in the best interests of clients, maintaining transparency, open access, and integrity.