The Insurance Brokers Code Compliance Committee (the Committee) has released its Annual Review 2018–19.
This year’s Annual Review highlights a number of key areas where insurance brokers need to make significant improvements, for the sake of the industry and their clients.
A snapshot of the key findings reveals that:
- The number of self-reported Code breaches increased by 32% from the previous year. This might reflect a positive breach reporting culture but could also warrant a review of the reporting structure and framework, and better staff training in Code compliance.
- There was a 22% drop in the number of large organisations who self-reported breaches in 2018. This is significant, given best practice for organisations of this size is a self-reporting rate of 100%.
- More than half (57%) of all Code subscribers self-reported nil breaches in 2018. Rather than signalling a job well done, these statistics may imply that many organisations’ internal frameworks may not be sufficiently robust to effectively identify Code breaches.
- The top two breach areas remained the same from the previous year – buying insurance (49%) and compliance with the law (24%).
- Small business policies were the products most complained about by clients, followed by home building policies.
- Most Code breaches were caused by manual error or a failure by staff to follow processes and procedures – a possible indication that Code subscribers need to improve how their staff are trained and monitored to comply with the Code.
Commenting on the learnings from the 2018–19 Annual Review, the Committee’s Chairperson, Michael Gill, said: “It is clear that insurance brokers need to take their Code obligations more seriously and focus on embedding a culture of good industry practice within their businesses.”
“Self-reporting of breaches has improved but we remain concerned that the majority of Code subscribers reported nil Code breaches in 2018. Brokers should be actively encouraging Code breach self-reporting by increasing the awareness of staff at all levels to understand why the Code exists and what their obligations are to clients.”
“In the wake of the financial services Royal Commission, and the recommendation to transfer all or part of industry codes into a legal framework with enforceable consequences, it has never been more important for insurance brokers to demonstrate they are meeting the service standards laid out in the Code and responding to client concerns in a fair and reasonable manner.”
“The Committee expects it; the community expects it. As ASIC Chair James Shipton told delegates at last week’s CFA Societies Australia Beyond Disruption Conference, Australia’s financial services industry could be the envy of the world, but we must continually strive to improve both standards and fairness.”
The Annual Review is based on information provided to the Committee by subscribers to the Insurance Brokers Code of Practice (the Code) via their Annual Compliance Statement for the 2018 calendar year. It presents an in-depth analysis of how Code subscribers have dealt with breaches of the Code and consumer complaints. This information assists the Committee to measure subscribers’ professionalism and competency.
A copy of the Annual Review 2018–19 can be obtained here.
About the Insurance Brokers Code Compliance Committee
The Committee is an independent body responsible for monitoring Code subscribers’ compliance with standards of good industry practice in the Insurance Brokers Code of Practice. The 293 subscribing insurance brokers have agreed to follow these standards and committed to acting fairly, ethically and reasonably when providing services to current and prospective clients. The Committee supports insurance brokers to achieve good practice in service and advice to their clients.