Removing the general insurance exemption to conflicted remuneration laws could “significantly affect” the take-up of broker services and leave the community exposed, a leading insurance lawyer has warned.
Meridian Lawyers Principal Andrew Sharpe told insuranceNEWS.com.au that given the evidence around add-on insurance presented at recent Hayne royal commission hearings, it is no surprise the issue is again under consideration.
But he echoes concerns voiced by the Insurance Council of Australia and the National Insurance Brokers Association over the impact of removing the exemption.
“Removal of the exemption… would be a significant change to the current system of principally commission-driven broker remuneration in respect of retail products,” he said.
“Current remuneration practices facilitate distribution of insurance products through advice-based broker channels, which have a real capacity to improve consumer outcomes through more appropriate product selection and claims advocacy services.
“Any broad-based removal of the exemption has the capacity to significantly affect take-up of broker services and runs the risk of adversely affecting net consumer welfare.”