NIBA may have escaped questioning from the Royal Commission so far but CEO Dallas Booth says the organisation isn’t counting its chickens and will be ready to respond the moment any interest is shown.
“NIBA has been pretty fortunate in that we haven’t been asked to provide information or respond to information requests,” Dallas told industry professionals gathered at the Steadfast Convention in Melbourne yesterday morning.
“We are relatively comfortable but we are not taking anything for granted,” he continued. “We are gearing up to be able to respond very quickly and very comprehensively if there is any interest from the Royal Commission in relation to general insurance broking.”
Booth also went some way towards easing brokers’ concerns, saying the commission had received an overwhelming number of public submissions but very few were in relation to insurance broking.
“The Royal Commission has received 3,254 submissions from the public,” he said. “But of those submissions, only 7% have been in relation to financial advice.”
Of the complaints and submissions that have been received around financial advice, Booth said the majority are to do with wealth and investments. He also noted that, while attention is certainly not out of the question, there is no strong evidence to suggest the commission would be shifting its focus to insurance any time soon.
“There is no doubt that insurance broking is within spoke of the Royal Commission, it is absolutely within scope,” he said. “At the moment though, we are not seeing indicators that the Royal Commission wants to get into general insurance broking. That’s not to say that it might in due course.”
Booth also confirmed the association had put together a detailed submission to government, opposing new design and distribution obligations on brokers.
“This draft legislation does not work and will not work in general insurance and it puts insurance brokers in a potentially horrible position and in potential conflict with their duty of acting in the best interest of the client,” he said.
“We’ve expressed strong reservations to the government and we’re not yet sure how the government will respond to those reservations but we know that the Insurance Council also expressed strong reservations.”
The legislation, which Booth said will affect both insurers and brokers, will see brokers banned from selling a product to a client if they’re outside of the target market determined by the insurance company.
“That puts a really weird new obligation on brokers – you cannot even do that if you think the target market doesn’t make sense for the client group,” he said.
“You have to make sure that a product is only distributed in accordance with the target market process that the insurer develops.”
Booth also bemoaned a proposed data collection obligation which he said would be “extensive and expensive” if put in place.
“It’s really quite awful, it’s complex and it’s ugly,” he said. “This thing is all cost and no benefit to clients at all. Brokers already have an overwhelming statutory and fiduciary duty to act in the best interests of the client and this does not add to any of that, it just adds complexity.”
