Brokers will have to reveal commissions

The financial services regulator is to force brokers to reveal details of commission payments on motor and liability insurance.

This follows the publication of a report by the Competition Authority highlighting the lack of transparency around commissions as one of the factors contributing to the high cost of motor and liability insurance.

A spokesman for the Irish Financial Services Regulatory Authority (IFSRA) - part of the Central Bank - said if the authority found it did not have the power to force brokers to disclose to clients the commissions they receive on motor and liability policies disclosure, it would look for that legislative power.

Brokers selling pensions and investment products are already obliged to disclose commissions.

The Competition Authority highlighted a lack of transparency about commissions and commission structure in its preliminary report on competition issues in the non-life insurance market. Fixed fees and incentives from insurance companies to encourage brokers to concentrate business with them potentially restrict competition, according to the Competition Authority.

"We are reviewing the whole area of fees and transparency - and the legal powers to issue such requirements," said the IFSRA spokesman. "If we need legislative powers we will look for that."

IFSRA plans to dovetail its review with the Competition Authority study, which is due to make recommendations by the summer.

Meanwhile, a business lobby group said yesterday that the Government needs to act more quickly in reforming the insurance sector because the "wheels of change are turning too slowly".

Mr Ciarán Ennis, president of the American Chamber of Commerce in Ireland, said: "If the final report of the Competition Authority confirms that insurance costs are inflated because of problems such as a lack of competition in the insurance broker market and a dearth of new insurance companies entering the Irish market, then these issues will need to be tackled more quickly by the Government.

Speaking at a lunch hosted by the chamber in Dublin yesterday, he said that, in 2001, insurance costs per capita were revealed to be 39 per cent higher in the Republic compared with the EU average.

"In a recent survey of our members, when asked where they had seen the largest increases in costs in the past 12 months, 75 per cent of respondents cited insurance premiums," he said.

"One member had seen insurance costs increase 100 per cent in the past two years, while others cited annual increases in premiums of 20 per cent."

Urging action, he said insurance was a cost that many businesses could not pass on to their customers.