The European Commission after a lengthy study has reported finding some questionable practices by the insurance industry including a lack of disclosure by brokers and an inherent conflict of interest presented by broker business models.
In its final report on the European Union insurance industry, made public Tuesday, the commission said that since brokers act as both a client advisor and distributor of insurance, the “dual role is a potential source of conflict of interest” between giving advice and the broker's business interests as a distributor.
Conflicts can arise from the broker's payments and contingent commissions, the report said.
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