The session featured BIBA head of compliance Julie Comer, Romero Insurance managing director Simon Mabb, and Insurance DataLab co-founders Dan King and Matt Scott. The panel discussed the growing challenges for brokers following the introduction of Consumer Duty and the crucial role data plays in navigating these changes.
Consumer Duty has introduced a significant compliance burden for brokers, particularly around the need to demonstrate they are delivering fair value to customers.
Comer emphasised this challenge, noting that brokers now face the pressure of “having to prove that the cost of their service is actually providing value to their clients”.
She explained that this involves gathering “vast amounts of data,” and that many brokers, especially smaller firms, are struggling to keep up with the workload.
“It’s problematic and resource-intensive as well,” she said. “You could have 30 agencies, but then 18 products within those agencies. So all of a sudden you’ve got 540 documents to produce and you’re looking at 30 weeks of continuous work.
“And that’s on top of just trying to do the day job and looking after clients.”
This has led to many smaller brokers being forced to sell their businesses as they can no longer cope with the regulatory workload.
Comer said that this has been exacerbated by insurers asking for greater commitments from their brokers, citing data from the Financial Conduct Authority (FCA) that shows a significant decline in the number of brokers in the UK, from more than 8,000 in 2006 to just 3,800 in 2023.
“That is astonishing,” she added. “Smaller brokers can’t always commit to the volumes insurers are asking for, and that reduces their options for capacity in the market.
“Worst-case scenario, brokers are ultimately leaving the market.”
Mabb echoed these concerns and said that it has been particularly troublesome in the personal lines market, where the regulatory burden has “rocketed”. He also warned that these challenges are alienating brokers from certain sectors.
“The mid to high-net-worth client market has really reduced rapidly,” he explained. “You end up having to find new markets for the ones that have disappeared, and then you’ve got to go through a whole load more paperwork to do that.”
Leveraging Data for a Competitive Advantage
But there are ways in which brokers can help to ease the burden of Consumer Duty, and even turn it into a competitive advantage, with having access to the right data essential.
“Brokers have a regulatory obligation to assess the value of the policies and what insurers are delivering as part of that value, and how they’re affecting outcomes,” Scott said. “Data is key here – it allows brokers to have a view on how insurers are performing across different metrics relevant to Consumer Duty.
“Having this data really helps to understand which markets might be best for your customers, beyond just looking at the price of a policy.”
But Scott said a lot of this data can be hard to come by.
“It can be really time-consuming and difficult to make direct comparisons,” he said. “This is especially tough for brokers who might not have a security committee or the support of a broker network.”
Insurance DataLab’s insight platform can help to simplify this process by providing access to customer experience ratings, claims handling metrics, complaints data, and underwriting results that can help brokers to make more informed decisions.
BIBA members can also take advantage of a 10% discount on the price of a subscription to the platform, including Insurance DataLab’s specialist solution: the Security Committee-in-a-Box.
Mabb supported this approach, explaining that brokers all too often rely on anecdotal evidence instead of hard data to support their placement decisions, citing the example of brokers’ claims experiences.
“One of the issues for brokers is that a lot of what we deal with is anecdotal evidence of claims handling,” he said. “If we’ve had four claims with a certain insurer and they’ve all gone badly wrong, you’d want to look at that and see what’s going on. But that might not be the trend – they might have just been unlucky.
“Conversely, if you’ve only had one claim and it went wrong, it might not be a systemic issue. But if you could look at wider data and see that everyone else who had claims with them suffered too, you would know not to continue using that market.”
Comer also pointed to the importance of information being requested by the regulator as a key reason why brokers will be focusing more on data.
“The FCA are becoming more data-led,” she said. “They’re digging into the data, scrutinising it, and really understanding what is going on behind the scenes. The key challenge the FCA is also looking for is how brokers are responding to issues they may potentially find – what are they doing about it, and are they tracking progress if they’ve made changes?”
Scott added that with the FCA becoming more and more interventionist, keeping your finger on the pulse has never been more important.
“We know this is the type of data that the FCA is looking at,” he said. “So having access to this same data can help protect brokers from regulatory scrutiny – by only working with those insurers that are providing good customer outcomes.”
BIBA members can watch a recording of the full session here.
We are also offering a free 7-day trial of our market intelligence platform, and don’t forget, BIBA members can also benefit from a 10% discount.