{"id":223296,"date":"2025-05-04T18:02:26","date_gmt":"2025-05-04T18:02:26","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/insurance\/regulation-costs-5-2-of-insurance-premiums\/"},"modified":"2025-05-04T18:02:26","modified_gmt":"2025-05-04T18:02:26","slug":"regulation-costs-5-2-of-insurance-premiums","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=223296","title":{"rendered":"Regulation costs 5.2% of insurance premiums"},"content":{"rendered":"


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New research commissioned by the British Insurance Brokers\u2019 Association (BIBA), and undertaken by London Economics, reveals that regulation costs amount to 5.2% of insurance premiums collected. This breaks down as 3.3% for insurance brokers, and 1.9% for insurers, with costs being higher for brokers despite their lower systemic risk.<\/p>\n

London Economics analysed both the direct and indirect costs of regulation borne by a sample of BIBA brokers and insurers covering both personal lines and commercial business. Direct costs of regulation include the fees and levies paid, and indirect costs include expenses incurred to comply with regulations such as the internal costs of staff and procured compliance services.<\/p>\n

The research builds on a study from 2023 which found that direct regulatory costs for brokers are 40% higher than in 2019, and overall direct and indirect costs are equal to 8.1% of insurance mediation fees and commissions.<\/p>\n

This new research reveals, for the first time, the impact of regulation costs in relation to insurance premiums paid by clients.\u00a0 BIBA believes these figures are further evidence of the disproportionate costs of regulation that insurance brokers face.<\/p>\n

Graeme Trudgill, BIBA Chief Executive, commented: \u201cThe cost of regulation is too high.\u00a0 It is disproportion to the risk that brokers pose, and now, not only can we demonstrate that it is expensive for brokers, but that high regulatory costs are impacting premiums by 5.2%.<\/p>\n

\u201cWe strongly believe that the burden of regulation can be reduced, and we are working closer than ever with the FCA on a number of opportunities to achieve change.\u00a0 Our Manifesto outlines six key asks for the regulator and we are pleased that they are collaborating constructively with us to make a difference for members.\u201d<\/p>\n

Patrice Muller, Senior Partner at London Economics, added: \u201cOur research highlights that a significant proportion of insurance company and broker costs \u2014 and, by extension, consumer premiums \u2014 can be attributed to the current regulatory framework. These findings point to a clear opportunity: by streamlining existing regulations and regulatory processes, there is the potential to deliver meaningful consumer benefits through lower premiums, while maintaining necessary protections.”<\/p>\n

For insurance brokers indirect regulatory costs, measured as a percentage of collected premiums, average 3.2% of collected premiums. For insurers, the indirect costs were identified as lower than those for brokers at 1.6% of collected premiums.<\/p>\n

ENDS<\/p>\n

Notes to editors<\/strong><\/p>\n

\u00a0For further information please contact<\/strong>:<\/p>\n

BIBA press office:
\nPam Quinn, Head of Communications
\n07562 616686
\nquinnp@biba.org.uk<\/a><\/p>\n

Leighann Forsyth, Deputy Head of Communications
\n07917 738727
\nforsythl@biba.org.uk<\/a><\/p>\n

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  1. The definition of direct cost and indirect costs borne by brokers and insurers<\/strong><\/li>\n<\/ol>\n

    The direct regulatory costs borne by insurance brokers include: <\/u><\/p>\n