This week, the Insurance Brokers Code Compliance Committee (IBCCC) announced that it sent letters to three insurance brokers sanctioning them for repeated failures to report breaches and complaints data. The sanction is a referral to NIBA for possible further action. The names of the offending brokers were not revealed.
Some industry stakeholders would like to see tougher penalties for brokers that break the Insurance Brokers Code of Practice (the Code).
“There is a clear case for the IBCCC to be given greater power to impose meaningful sanctions,” said Tyrone Shandiman (pictured, left). “What is the point of having a Code if there are no meaningful consequences for breaching it?”
Insurance Business reached out to Shandiman, who is a broker and chair of the Australian Consumers Insurance Lobby (ACIL), with questions about this issue and the IBCCC’s powers. He said the Code must be enforceable and the IBCCC should have greater powers to impose sanctions “that deter non-compliance and protect consumer trust.”
IB also asked if there is a case for naming the brokers sanctioned? Shandiman said ACIL believes brokers should be named, particularly in cases - like this one - of repeated non-compliance.
“While each case should be considered on its merits, when a brokerage fails to meet a mandatory reporting obligation for three consecutive years, as is the case here, that’s a clear and ongoing breach,” said Shandiman.
Reputational accountability through public naming, he said, could encourage greater industry wide adherence to the Code.
“Reputational accountability is often more effective than a private breach notice,” said Shandiman.
The release said the matter will now be considered by the NIBA board.
“Our members understand the importance of meeting their obligations, and we are encouraged by the improvements in compliance across the sector,” said Richard Klipin, NIBA’s CEO. “Where issues arise, they are being identified and dealt with, and that is exactly what a functioning Code framework should deliver.”
The release said it is “disappointing that a small number of brokers have failed to meet their Code obligations.” However, NIBA pointed to the decline in late submissions in recent years as evidence of the broking community’s “professionalism and a strong culture of accountability and responsiveness to regulatory expectations.”
The release said all three brokers failed to meet the March 31 deadline for the third consecutive year despite multiple reminders and clear guidance from both the IBCCC and NIBA.
Oscar Shub (pictured, right), the IBCCC’s chair, highlighted the importance of this reporting obligation. “Annual compliance statements are not optional,” said Oscar Shub, the IBCCC’s chair. “They are a basic and essential obligation for every insurance broker that subscribes to the Code.”
He said when brokers repeatedly fail to meet this commitment, it raises “real questions.”
“It raises real questions about their systems, their governance, and ultimately, their commitment to professionalism,” said Shub.
The IBCCC said each case was a systemic breach of section 11.4(b) of the Code which concerns the need for Code members to comply with the Code.
The release said each broker cited different reasons for their delays including system issues and competing work pressures. The IBCCC, said the release, found none of the explanations sufficient, “given the importance of the obligation and the time brokers had to prepare.”
However, the release also noted industry wide improvements in reporting. The IBCCC said the number of brokers missing the deadline has fallen from 86 in 2023 to 11 in 2024.
IB has reached out to the IBCCC chair with questions concerning his committee’s powers and expects to publish responses soon.
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