The Insurance Brokers Code Compliance Committee (IBCCC) has urged Australian insurance brokers to address shortcomings in their disclosure, communication, and reporting practices.
This advice follows a rise in breaches identified in IBCCC’s 2023 Annual Data Report.
According to the report, breaches related to remuneration disclosures have increased sharply, rising from 23 in the previous year to 106 in the latest period.
IBCCC chair Oscar Shub stressed the need for brokers to provide clear and transparent information about commissions and other forms of compensation they receive for their services.
“It is crucial for brokers to provide clear information about any remuneration they receive. Clients have a right to know about commissions or other benefits brokers expect from providing certain services,” he said.
He further emphasised that the jump in breaches signals that brokers need to enhance their practices in this area.
The report also highlighted a significant increase in breaches related to policy renewals, with failures to meet renewal timeframes growing by 48% – from 1,397 in 2022 to 2,073 in 2023.
Shub emphasised the importance of brokers meeting the Insurance Brokers Code of Practice’s requirement of notifying clients at least 14 days before a policy’s expiration to ensure uninterrupted coverage.
“Timely renewal communication is vital to ensure continuous coverage and prevent potential financial risks. Unfortunately, too many brokers are falling short in this area,” he said.
In addition to issues with disclosure and communication, the report flagged concerns over the accuracy of brokers’ breach reporting.
Despite the IBCCC’s push for improvement, many brokers continue to submit incomplete or inconsistent data, it was suggested.
Shub said accurate reporting of breaches is essential for identifying systemic issues and improving service delivery because incomplete data not only undermines client trust but could also lead to costly disputes.
“Poor data collection is a missed opportunity and can lead to poor outcomes for clients, as well as increased costs due to dispute resolution,” he said.
The IBCCC calls on brokers to take the findings seriously and work toward meeting the expectations set by the Insurance Brokers Code of Practice, stressing that improvements are necessary to maintain client confidence and industry standards.
The National Insurance Brokers Association (NIBA) responded to the report by acknowledging the value of the findings and the progress made in self-reporting.
“We are encouraged to see that the number of brokers reporting breaches continues to increase with the number of subscribers self-reporting breaches having increased by more than 26% since 2020,” it said.
While noting the improvements, NIBA stressed the need for brokers to further enhance compliance and reporting practices.
“While we are pleased by the improvements highlighted in the report, we recognise there is always room for improvement,” it said.
The association affirmed its commitment to collaborating with the IBCCC to encourage insurance brokers to report breaches.
In light of the issues identified in the report, the IBCCC issued new guidance in March 2024 to help brokers improve their reporting practices, particularly regarding the accuracy of breach and complaint submissions.
The guidance encourages brokers to ensure that their internal processes are robust and that breaches are properly identified and reported.
The IBCCC will continue to monitor brokers’ compliance and reporting practices and has reiterated its commitment to fostering higher standards across the insurance broking sector.
