The Insurance Brokers Code of Practice independent reviewer says he is disappointed the profession’s peak body has “walked back” a previously agreed recommendation to extend remuneration disclosure for small businesses.

As reported in a Breaking News bulletin yesterday, the National Insurance Brokers Association has published the final draft of its new code and launched a month of consultation.

NIBA appointed reviewer Phil Khoury, from law firm crkhoury, in November 2024, and his final report was published at the end of last year. His recommendations included requiring disclosure of fees and commissions to all individual and small business customers – regardless of product.

Currently the disclosure requirement is limited to retail clients as defined by the Corporations Act - which means individuals or small businesses buying a set list of mostly personal lines products.

This issue became a long-running flashpoint during the previous code review, as many industry figures argued unsophisticated small businesses deserved the same level of disclosure as individuals, and that the definition of retail client in the Corporations Act is too limiting.

However, some brokers disagreed, and the final version of the last code stripped out an extension.

It looked as though the change would be reinstated as part of the current review, with NIBA saying in January it backed Mr Khoury’s recommendation to require disclosure to small businesses, and it would “apply regardless of policy type”.

However, the draft published yesterday retains the retail client restriction.

Section 7.1 (a) (i) reads: “We must disclose our remuneration… for general insurance products that are retail products under the Corporations Act 2001 (Cth), to every client who is an individual or a small business and to whom we provide covered services.”

The code does introduce disclosure for strata clients “whether or not” they are retail clients and says if a business of any size asks a broker for remuneration details on any product, the broker must provide the dollar figure.

But Mr Khoury told insuranceNEWS.com.au he stands by his original recommendation.

“We are disappointed that NIBA has walked back the remuneration disclosure we recommended for small business,” he said.

“Our view is that small business should be treated in the same way as a retail insurance customer. Unless a small business has access to significant insurance expertise within its own ranks, it is in the same position as a retail insurance customer. It is relying on the broker for trusted advice.”

The Australian Consumers Insurance Lobby welcomes the strata extension but says it has concerns about the broader approach to remuneration disclosure.

“The draft code ultimately falls well short of what consumers, independent reviewers and even senior figures within the insurance industry have been calling for,” chair Tyrone Shandiman said.

“The fundamental issue hasn’t changed. Most small business clients will still not be told how their broker is being remunerated unless they know they can ask. The burden remains on the consumer.”

Mr Shandiman says it is “disappointing” because there has been “extraordinary consensus” on the issue.

“The overwhelming weight of opinion has been in favour of proactive disclosure for small businesses, yet NIBA has chosen not to implement that recommendation in full.

“If commissions are the right way to remunerate insurance brokers, there should be nothing to hide. Consumers shouldn’t have to hunt through the code of practice to discover they have a right to ask what their broker is being paid. They should simply be told.

“This was an opportunity for NIBA to demonstrate genuine leadership and embrace transparency. Instead, it has settled on a compromise that creates the appearance of significant reform while leaving the core issue unresolved.”

NIBA confirmed to insuranceNEWS.com.au that it has changed its position since January, following further consultation and research.

“We listened to members and stakeholders and we’ve landed in a place where, on balance, across the code, we’ve delivered improvements across a range of areas,” CEO Richard Klipin said. “We believe it is fit for purpose for the sector, for consumers and for communities.

“There is a consultation period open and we welcome all feedback directly.”

Consultation finishes on August 7, and NIBA is aiming to launch the new code on January 1.

Read the draft code in full here.