According to figures released by the Australian Financial Complaints Authority (AFCA), out of more than 100,000 complaints the regulator received from consumers last financial year, only 584 concerned insurance brokers.
“Your volumes are very small,” said AFCA’s CEO David Locke (pictured above) at the recent National Insurance Brokers (NIBA) Convention in Adelaide.
“In fact, many of you in this room have never interacted with AFCA,” he said.
The chief ombudsman said this could be because brokers are resolving disputes with clients before they escalate.
“And I applaud you if this is the case,” he said.
On its website, the headline of a NIBA article celebrated this success: Broker Complaints Less Than 1% as Case Numbers Reach Record Highs, said the headline.
The 1% referred to broker complaints as a percentage of all financial complaints AFCA receives. Put another way, the 584 complaints about brokers constitute 2% of the total of 29,000 general insurance complaints.
Either way, complaints to AFCA about brokers are low. However, NIBA openly acknowledged that this positive figure doesn’t tell the whole story.
“However, Mr Locke went on to say that it would be a mistake to be complacent,” said the NIBA report.
In his speech at NIBA’s Convention, Locke said the low number of complaints could mean that “clients are unaware they can complain about a broker in addition to an insurer.”
The AFCA CEO also said there are some common themes in the complaints received concerning insurers and brokers.
“The most complained about issue for brokers is also the most complained about issue for General Insurers and that is about delays in claim handling,” said Locke.
He said 15% of all complaints about brokers concern the length of time it takes for a client just to get a response to a claim submission.
“This is not good enough,” said Locke.
He said improving client communication is the way to decrease these numbers.
“A key aspect of your service is acting in your clients’ best interests by checking to make sure a policy still meets their needs, rather than simply renewing it each year,” he said.
Locke also mentioned “very simple things to fix” including providing up to date policy documents to clients.
Insurance Business reached out to the Insurance Brokers Code Compliance Committee (IBCCC) for a view on the low number of complaints about brokers.
“AFCA's external dispute resolution data provides valuable insights but represents a narrow view for assessing the overall state or performance of an industry,” said a spokesperson.
The spokesperson said customer complaints, including ones that escalate to external dispute resolution, are an important source of information for any business, including brokers.
“They help identify issues and prevent problems in the future,” said the spokesperson. “However, it is important to note that breaches of the Code do not always have a direct relationship with complaints.”
The spokesperson was referring to the Insurance Brokers Code of Practice.
“In many cases, a breach of the Code may not trigger a complaint at all: some issues go unnoticed by a customer, and some customers are unaware of a financial firm's obligations,” they said. “But to uphold the standards of the Code, a broker must still identify, report, rectify or remediate a breach even if it does not result in a complaint.”
Breach reporting is a key issue for brokers. The IBCCC says only about 63% of brokers report breaches. That number is worse than it looks because, says the IBCCC, “many brokers continue to submit incomplete, inaccurate, or inconsistent compliance data.”
“We want more breach reporting to come through to the IBCCC,” said NIBA’s president Gary Okely at the NIBA Convention. “I think it’s really important that we learn from what we do.”
Okely said this approach would “help make sure we are in that self-regulatory mode.”
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