BIBA has published high level principles which have been agreed by the European Federation of Insurance Intermediaries (BIPAR) for brokers placing a risk with multiple insurers. The principles have been produced following the European Commission’s inquiry into the business insurance sector. In the final report of the Commission serious concerns were raised in relation to the placing of co-insurance business. In particular the Commission expressed concerns about the absence of opportunity for the following market to compete on premium.

The Commission has welcomed BIPAR’s high-level principles and has said that if these high level principles are properly implemented their immediate concerns regarding market problems will be removed.

The high level principles are as follows:

  1. The intermediary shall, based on information provided, specify the demands and needs of the client as well as the underlying reasons for any advice.
  2. Before placing a risk, an intermediary will review and advise a client on market structures available to meet its needs and, in particular, the relative merits of a single insurer or a multiple insurer placement.
  3. If the client, on the advice of the intermediary, instructs the latter to place the risk with multiple insurers, the intermediary will review, explain the relative merits and advise the client on a range of options for multiple insurer placement. Intermediaries will expect insurers to give careful independent consideration to the option requested.
  4. In the case of a placement of a risk with a lead insurer and following insurers on the same terms and conditions, the previously agreed premiums of the lead insurer and any following insurers will not be aligned upwards should an additional follower require a higher premium to complete the risk placement. Indeed, the intermediary should not accept any condition whereby an insurer seeks to reserve to itself the right to increase the premium charged in such circumstances.
  5. During the placement of the risk, the intermediary will keep the client informed of progress.

BIBA has urged its members on the subscription market to adopt the principles.

For further information: High Level Principles For Placement of Co-Insurance