Insurance brokers should not be “tarred with the same brush” as financial services sectors exposed at the Hayne royal commission, the National Insurance Brokers Association (NIBA) says.
In its submission to the policy questions document following last month’s insurance hearings, NIBA draws attention to the small number of complaints about brokers, and the lack of regulator concern about their conduct.
Figures from the Financial Ombudsman Service (FOS) show that out of 8603 general insurance complaints last financial year, only 181 related to brokers.
“FOS has not indicated to NIBA that it has any significant concerns with insurance broker conduct or complaints,” the submission says.
NIBA says the Insurance Brokers’ Code of Practice, which is under review, is operating “soundly” and nothing at the royal commission hearings suggested brokers are not meeting their obligations to customers.
“Insurance brokers should not be unfairly tarred with the same brush as others in the financial services industry,” it says.
In fact, NIBA believes many of the issues raised in the hearings may not have occurred had brokers been involved.
“Had insurance brokers been representing consumers [who told the royal commission of their claims ordeals], many of the significant issues identified regarding insurer misconduct in the direct and agency space (especially regarding claims handling and lack of consumer understanding) most likely would have been avoided.”
NIBA argues against further radical reform of the regulatory regime, saying a series of changes that are already planned will be sufficient to address any concerns.
While accepting “there is always room for improvement”, NIBA warns against increasing complexity.
“Change comes at a cost for the consumer, and NIBA is concerned that consumers do not pay for change that is of little real end benefit.
“NIBA is of the view, in the insurance context, that while specific issues have been identified in the royal commission that can be improved, a major shift is not justified. NIBA does not support a hardline enforcement approach.”
As previously reported by insuranceNEWS.com.au, NIBA says its key concern is that general insurance remains exempt from the ban on conflicted remuneration.
“NIBA is strongly of the view there has been nothing identified in the hearings or otherwise regarding insurance broker conduct that would reasonably support a recommended change from the exemption as it applies to general insurance brokers,” it said.
CEO Dallas Booth told insuranceNEWS.com.au today he is “disappointed” brokers may potentially be caught up in solutions to problems they didn’t cause.
He says “people are not choosing their words carefully” and might sometimes be including brokers unintentionally.
“We are not complacent and want to make sure that where comments could include brokers, we respond fully.”