The Insurance Brokers Code Compliance Committee (IBCCC) has issued its Annual Report for 2023-24, urging the insurance broking industry in Australia to make improvements in key areas, including transparency, breach reporting, remuneration disclosure, and client communication.
The report revealed a significant rise in breaches related to remuneration disclosure and policy renewals.
Instances of remuneration-related breaches rose from 23 in 2022 to 106 in 2023. Policy renewal breaches also increased by 48%, from 1,397 to 2,073 cases.
These findings highlight the need for insurance brokers to strengthen their adherence to the Insurance Brokers Code of Practice to ensure better compliance and improved client outcomes.
IBCCC chair Oscar Shub underscored the necessity for brokers to be transparent about their remuneration, including commissions and other forms of compensation.
“Clients have a right to know about commissions or other benefits brokers expect from providing certain services,” he said.
He stressed that brokers need to focus on providing clear, accurate information about how they are compensated to maintain client trust and transparency.
The report also pointed to ongoing challenges with policy renewals. A significant number of brokers failed to meet the code’s requirement to notify clients at least 14 days before a policy expires.
Shub emphasised that timely communication about renewals is essential to avoid coverage gaps that could expose clients to financial risks.
In addition to these issues, the IBCCC highlighted concerns about the accuracy and completeness of brokers’ breach reporting.
Despite ongoing efforts to enhance data collection, many brokers still submit incomplete or inconsistent breach data.
Accurate breach reporting, Shub noted, is critical for identifying systemic issues and preventing costly disputes.
The IBCCC took proactive steps during the 2023-24 period to address these concerns by engaging directly with 134 brokers – approximately one-third of those subscribing to the code. This engagement was aimed at verifying and clarifying breach and complaint data.
The committee reported that this initiative led to an increase in brokers reporting breaches and complaints, although a notable number of larger brokers still reported zero breaches, raising concerns about potential underreporting.
Simplifying the reporting process was another key focus of the IBCCC’s work in 2023-24. The committee worked closely with the National Insurance Brokers Association (NIBA) and other stakeholders to embed reporting requirements into Steadfast’s breach and complaint management system, covering about 60% of brokers.
Additionally, a working group was formed to explore ways to reduce the administrative burden on brokers while maintaining high-quality data reporting standards.
Beyond reporting improvements, the IBCCC also focused on advocating for stronger protections for small businesses.
The committee raised concerns about the current distinctions between retail and wholesale clients under the code, which may leave some small businesses with fewer protections.
The IBCCC has urged that all small businesses be classified as retail clients to ensure they receive adequate safeguards, regardless of the insurance products they use.
Looking ahead, the IBCCC plans to continue refining its approach to investigations and further improving the quality of breach and complaint data reporting.
The committee aims to focus its efforts on addressing areas where non-compliance presents significant risks to clients while providing education and guidance to brokers.
The review of the Insurance Brokers Code of Practice offers a key opportunity for the IBCCC to advocate for more robust client protections and enhanced standards across the industry.
NIBA welcomed the release of the IBCCC’s report, acknowledging the committee’s efforts to simplify reporting processes and promote improved practices.
While NIBA recognised the concerns raised about remuneration disclosure, it noted that these obligations only took effect in late 2023 and expected that future data would better reflect brokers’ compliance with these requirements.
“We commend the IBCCC and the code team for their efforts over the 2023/24 financial year and look forward to continuing engagement and collaboration,” NIBA said in a statement
