Uninhibited competition is way forward, says FT

Posted : 16-11-2004

The Financial Times (FT) has put forward the case for a system of uninhibited competition in the insurance industry.

As the New York attorney general Eliot Spitzer gears up for another attack on the US insurance industry, the FT has argued that the UK market would do well to move to uninhibited competition so as to protect itself from the fallout of any further cases.

Mr Spitzer is preparing a second lawsuit alleging that the market was distorted by corrupt arrangements between providers and a broker and the FT is warning that the future of the commission system is now in jeopardy.

In an editorial, the FT suggests that the industry is wrong to adopt a policy of full disclosure of commissions and instead claims uninhibited competition is "obviously the answer".

It argues that it will become "increasingly difficult" for brokers to justify taking fees from insurers and the activity of Mr Spitzer in New York puts companies coming to renew their insurance policies in a stronger position than ever before.
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