Code compliance report calls for remediation improvements
The Insurance Brokers Code Compliance Committee (IBCCC) says subscribers need to improve the quality and efficiency of breach remediation activities, raising concerns about survey data showing a “concerning lack of detail” about actions taken.
Short term remediation actions involved an apology in about 24% of breaches, while providing undertakings, procedure changes and training were each involved in about 13% of cases, the 2022 Annual Data Report released this week shows.
For 23% of breaches, subscribers used the category “other” to describe their short-term remedial action, and “other” was used to describe long-term remedial responses for 17% of breaches. The IBCCC also raises concerns about timeframes.
“This suggests subscribers are applying a ‘quick fix’ to a breach when it occurs rather than taking the time to identify and address the root cause,” the report says.
The IBCCC says improving processes and procedures would allow firms to learn from mistakes, and the report includes examples of breaches that could have been prevented.
In one case, a breach was caused by vehicle terminology confusion, with the problem discovered when a client notified a claim related to a truck trailer, but the policy only listed coverage for a truck.
“A review revealed that that the client’s proposal form had referenced a ‘dog’, but the client advisor had not known this was a type of truck trailer and had not sought further information from the client,” IBCCC says.
“Although the client adviser no longer worked for the subscriber, the subscriber advised that it would have provided training on the thoroughness of assessing client documentation and seeking clarity from clients.”
The detailed analysis of self-reported breaches and complaints from last year expands on data in the recent IBCCC annual report, which expressed concern over the fact that 175 brokers reported no breaches and 152 reported no complaints.
“The numbers are worrying and prompt important questions about the thoroughness of self-assessment. Are all issues being accurately reported? Transparency is paramount in maintaining trust within our industry,” IBCCC Independent Chair Oscar Shub says.
The IBCCC wants brokers to look more closely at the root causes of breaches and has urged subscribers to shift their focus from simply identifying the “who” and “what” of breaches to understanding “why” they occur.
“This shift in perspective can lead to more effective preventive measures and ultimately better consumer outcomes,” Mr Shub says.
The data report covered a period when both the 2014 and 2022 codes were effective, and breaches are expected to rise with the clearer principles and guidance in the updated document.
“Regulatory changes often require a period of adjustment as industry adapts and integrates new compliance measures,” Mr Shub said. “An increase in reported breaches will demonstrate that insurance brokers are aligning their businesses with the updated standards.”
The National Insurance Brokers Association (NIBA) says it’s encouraged to see in the data report that while the number of subscribers reporting breaches increased by 17%, the overall number of recorded breaches reduced by 5%.
“This highlights the subscribers’ commitment to the code and the code principles,” CEO Phil Kewin said.
NIBA is working with the IBCCC and members to improve communication of the necessity to record breaches, as well as addressing some of the reporting mechanisms that are proving to be obstacles for expedient and efficient reporting, Mr Kewin says.