London’s £68bn insurance broker market to be probed by regulators
Financial regulators are to probe whether the City's prized insurance broker network is delivering value for money amid concerns it is skewed towards larger players, allowing them to squirrel away bigger profits.
The Financial Conduct Authority (FCA) wants to know whether London's £68bn insurance market is fostering sufficient innovation and competition and today launched a "Wholesale Insurance Brokers Market Study".
The watchdog said there have been "significant changes" in the wholesale insurance sector over recent years "which has seen brokers developing new services and business practices".
Effective competition is key to London maintaining its pre-eminent status as an international centre for insurance, the FCA said.
“Given the size of the wholesale insurance sector and the type of large-scale risks it covers, the way it functions can have a wide-ranging impact on the broader economy," said FCA executive director of strategy and competition Christopher Woolard.
"If businesses cannot get appropriate cover or pay more for services than they should, it can impact on their ability to operate and grow.
Brokers play an important part in the wholesale insurance sector ensuring clients get appropriate coverage at good value. However, following significant changes in the sector, we are looking at the dynamics to ensure competition is working well.
The FCA has asked for responses to its study by 19 January 2018 with a view to publishing its findings in Autumn 2018.