Home / Daily / Service standards, legal obligations dominate broker code breaches
2 December 2021
Non-compliance in relation to service standards and legal obligations as set out in the Insurance Brokers Code of Practice dominated subscriber breaches last year, similar to the prior 12-month period.
Service Standard 5 of the code – which states a subscriber will act diligently, competently, fairly and with honesty and integrity – made up 49% of all breaches, the Insurance Brokers Code Compliance Committee (IBCCC) says today in its newly published Annual Data Report.
Service Standard 1, which covers compliance with legal obligations, accounted for 22% of breach numbers.
IBCCC says the report’s analysis of the code breaches again underscores the importance of culture within broking organisations.
“Better compliance requires a cultural shift,” IBCCC Chairman Michael Gill said. “It is clear from some of the findings in this Annual Data Report that such a focus will indeed be required.”
After Standard 5 and 1, Standard 7 – which relates to money handling – was the third most breached area at 11%. Next was Standard 12, which is designed to ensure that subscribers do not bring the insurance broking profession into disrepute.
The Annual Data Report follows the release in August of the IBCCC’s annual report where an initial summary of self-reported breaches and complaints figures are provided.
The IBCCC says the Annual Data Report contains a detailed examination of the annual compliance statement (ACS) verification program, the cornerstone of the committee’s compliance monitoring program.
Overall code breaches increased by 66% on the previous reporting period but the number of subscribers who self-reported breaches dropped to 44% from 51%, meaning more than half failed to record any incidents at all including three in the largest size broking category.
“This is concerning because it potentially signifies that large numbers of subscribers have compliance frameworks that fail to detect breaches or complaints, or a weak or non-existent self-reporting culture,” the IBCCC said.
The National Insurance Brokers Association (NIBA) has responded to the Annual Data Report’s findings.
NIBA says its initial analysis of the report is that it appears the regime is working, citing the absence of systemic inappropriate misconduct.
The majority of breaches relate to human error or poor processes, so there is more work which can be done by licensees in areas such as training programs, review of policies and procedures, and promotion of best practice behaviours.
“The report upholds the professionalism of the insurance broking industry as outlined in the Code of Practice and focuses on the continuous improvements that brokers can undertake to best serve the needs of their clients,” CEO Philip Kewin said.
“The NIBA Board and I will be completing a full analysis of the report to identify opportunities to engage with our members and other key stakeholders in relation to the report’s findings.
“Our goal is to continue to pursue high levels of professional conduct by insurance brokers in Australia, both under the existing Code of Practice and under the new Code of Practice when it is finalised in the near future.”
Click here to access the report.