Peter Blanc explains why we should aim for a standard market TOBA

12th March 2018

A market standard Terms of Business Agreement is a great idea

Most brokers need to deal with in excess of 30 insurance companies and markets and typically we find that brokers that we are looking to acquire hold in excess of 100 different agencies by the time you take into account MGAs, wholesalers, specialist facilities as well as all of the usual insurance companies and Lloyd’s markets. Each and every one of those markets issues a Terms of Business Agreement (TOBA) which the broker then checks and, in most cases, signs and returns.

BIBA has considered for a long time that a huge amount of time and effort could be saved collectively across our profession, if the majority of brokers and insurers agreed a market standard TOBA which could form the basis of arrangements between brokers and their insurers. The standard TOBA could then be endorsed to deal with specific requirements of either party but at least everyone would be starting from a sensible common ground position. I am pleased to advise that the work is well underway and most insurers are giving the concept consideration. I would urge all insurers and brokers to get behind this project for the following reasons:

  1. The typical arrangements between insurers and brokers are well understood by all in the market. I cannot recall many situations where insurers have taken legal action against brokers for a breach of the TOBA (or vice versa) and thankfully disputes of this nature are rare.
  2. Many brokers simply find it a strain on resources to properly read, check and challenge so many insurer issued TOBAs. Brokers signing them is therefore very similar to most of us agreeing to online terms and conditions – we simply click ‘yes’ and accept without ever reading them. To that end, what purpose are they serving?
  3. BIBA, whilst acting for brokers, is acknowledged and respected by the entire market as being a sensible trade association and they have approached this project with the aim being to agree a sensible, common-sense TOBA which should be acceptable to all parties. The ability to ‘tweak’ the TOBA to deal with specific problems or issues will of course remain but that should be the exception rather than the rule. Adopting a market standard TOBA as an opening position will save us all countless man hours of bureaucracy and I believe will help to establish market standard ground rules of behaviour which can only be a good thing.
  4. Productivity – one of the themes of BIBA’s manifesto this year will be seeking to improve productivity in our profession. Well, this is an easy starter for ten to streamline agency agreements and TOBAs across the market.

So, can all brokers lean on their insurer partners to adopt the BIBA standard TOBA and can insurers please also get behind this project? Let’s all spend our time innovating and creating products for our clients rather than negotiating meaningless clauses between ourselves!

Peter is Chair of BIBA’s Larger Brokers’ Advisory Board