The Financial Conduct Authority in the United Kingdom is conducting an investigation into the alleged prohibited conduct of four global reinsurance brokers including Aon, the Jardine Lloyd Thompson Group, Willis Towers Watson, UIB and Marsh.
The regulator is specifically looking into allegations that these firms have been sharing competitively sensitive information regarding their aviation insurance accounts.
This development came a few weeks after one of the top non-life insurance companies in the Philippines filed a related complaint against Marsh in the UK High Court in London.
Lawyer Jose Bernas, who represented the non-life insurer, claimed that Marsh allegedly disclosed highly confidential and proprietary aviation insurance information to the chief executive of a local airline, which indicated a malicious breach of trust.
“What they did was to share competitive cost information in order to besmirch the reputation of my client and to steal business away from them,” Bernas said.
“I hope that this kind of behavior does not taint the entire industry, because this lack of ethics sets a negative precedent for insurance companies that play by the proper rules. It’s a good thing that the FCA is cracking down on this conduct,” he said.
Bernas also urged the Philippine Insurance Commission to take a closer look at the way foreign reinsurance brokers operated within the country.
“By divulging restricted information and poaching insurance clients through this practice, brokers will effectively be underwriting risk and doing insurance business without a license,” he said.
“Even more worrisome is the fact that they will not be responsible for the risks insured,” Bernas said.
Marsh reportedly settled this particular case out of the UK High Court, but the FCA is still pursuing administrative violations of insurance industry rules against the brokers.
Apart from their conduct involving aviation insurance accounts, a number of global property and casualty insurers also urged the FCA to investigate other abuses carried out by insurance brokers, including demands for excessive commissions, the introduction of various fees and charges and predatory behavior at the expense of customers and undertakers.
