A group of 24 insurance brokers left Dublin yesterday on a trip to South America courtesy of the Hibernian insurance company. Described as "a sales promotion trip", the brokers will spend 12 days in South America on an itinerary which includes visits to Rio de Janeiro in Brazil and the equator.
The brokers, who sell both life and general insurance and sell the products of a number of insurance companies, will be accompanied by eight Hibernian sales staff.
Hibernian said the trip was organised because it "is constantly looking for new and more effective ways of meeting our customers' needs and any sales promotional exercises or tours are aimed at improving the quality and effectiveness of the service provided to our customers through the customers". The latest excursion follows Hibernian trips for brokers in the past two years to South Africa and Spain. Other insurers and financial sector companies offer trips and inducements for brokers.
However, one senior industry source commented that most involve entertainment in the local market or two- to three-day trips abroad. "There aren't many which are on the grandiose scale of Hibernian," he said. Journalists have been among the beneficiaries of Hibernian's corporate entertainment programme.
Insurance companies compete for business from brokers whose role is to advise and place their clients' business with the insurer best suited to those clients' needs. Under their voluntary code of practice, brokers have a duty to act in the best interest of their clients. An industry source interpreted this as a duty to give the best advice possible to clients regardless of the remuneration or inducements offered by insurers.
Some industry sources have expressed concern to The Irish Times that some of these trips represented "extravagant entertainment of brokers" and could be seen as compromising the independence of the advice brokers give to their clients and driving up the price of insurance products. Hibernian declined yesterday to answer a list of written questions supplied by The Irish Times. In a statement the company said: "Hibernian's approach to sales promotion trips is in line with that of many of its competitors in the financial services sector. Hibernian has seen no evidence whatsoever that sales promotion initiatives of this type influence the independence or impartiality of brokers' advice to clients. Brokers who fail to offer their customers the best product, most suitable to the customers' needs, for the best-value-for-money price face losing their customers' business in what is a very competitive market."
Irish Brokers' Association chief executive, Mr Paul Carty, dismissed concerns that inappropriate advice or the sale of inappropriate products to clients could result from the availability of attractive trips and other inducements.
On the latest Hibernian trip he commented: "The question is a valid one. But I do not see the trip as extravagant in the context of the company's £2 to £3 million [€2.54E3.81 million] annual marketing budget and the millions of revenue the brokers generate for the company. These are 24 key suppliers to Hibernian".
Mr Carty said he would be concerned if there were any question of conflict with brokers' duty to their clients. But he said he saw no conflict and that such inducements were "a normal part of the cut and thrust of business".
Commenting that brokers were probably chosen for the trip by the volume and quality of business they placed with Hibernian, he added that business was now so "cut-throat" that none of the brokers involved was "so hard-up for a trip that they would jeopardise their businesses by giving inappropriate advice or sell inappropriate products".
Commissions and other inducements paid by insurers to brokers has been a controversial area for some time. There are now no controls on what companies can offer brokers.
