Altus

In April 2008, after almost a year of consultation and much industry debate, the FSA unveiled its Retail Distribution Review Interim Report. There will no doubt be plenty more heated discussion before any final regulation emerges but it is clear the FSA is determined to tackle commission bias and is prepared to contemplate some radical changes to do so.

Whilst the original Discussion Paper (DP07/1), talked in general terms about the need for Customer Agreed Remuneration (CAR), the latest report sounds more draconian –going so far as to talk about a potential future ban on any payments from manufacturers to distributors (before conceding that this would not be practicable at the moment).

Whatever the eventual shape of new regulation, it is clear that the relationship between manufacturer, distributor and consumer is about to change. To prepare for that change (and maybe even influence it), requires a clear understanding of current production and distribution costs. Unfortunately, for many insurers, that knowledge is buried in a complex web of systems and processes that have grown up over years.

Altus understand that complexity and have helped our clients get to grips with it by providing clear pictures of how the different parts fit together and where money flows within the whole system. By visualising what happens to each pound of premium, we can help clients to think through the consequences of change to their business model and to highlight potential issues.