2020 NIBA Virtual Convention: An overview from regulators
Day four of the 2020 NIBA Virtual Convention ended with an overview from regulators.
Emma Curtis, Commissioner of the Australian Securities and Investments Commission (ASIC), David Locke, CEO and Chief Ombudsmen of the Australian Financial Complaints Authority (AFCA), and Michael Gill, Chair of the independent Insurance Brokers Code Compliance Committee discussed the current regulatory landscape and what it means for insurance brokers.
In opening the regulatory session, Curtis revealed that despite deferring work on a number of royal outcomes and reducing the regulatory burden on brokers due to COVID-19, ASIC is still hard at work the 17 financial services bills introduced prior to the announced deferral.
When talking on opportunities for brokers under the new Design and Distribution Obligations (DDO) she said that brokers were well placed to understand how clients use these products and that it is critically important for brokers and insurers to begin engaging and establishing communication flows early, as broker feedback will allow insurers to further refine their products.
Curtis also informed the audience that ASIC’s final regulatory guidance on DDO will be released in the coming few weeks.
She also clarified the expectations ASIC has of insurance brokers with the regulator identifying a number of policies that did not have effective pandemic exclusion clauses. ASIC has communicated to insurers and brokers their expectations under these policies where claims may be able to be made. This is done to ensure small businesses can continue to trade through the pandemic.
When speaking on the future of broking she stressed the expectation that intermediaries will continue to put clients first, she also stressed the need for a strong, aspirational broking code of practice that is reflective of where brokers would like their industry to head adding that this will place the industry on “a good path to rebuilding consumer trust”.
ASIC also expressed concerns about the adequacy of breach reporting mechanisms and culture within firms as self-reporting figures under the code remain low. “There needs to be a cultural acceptance within businesses that breaches should be reported and that it is important to learn from mistakes.”
David Locke said that AFCA received 80,000 complaints up 14 per cent from those received in the previous year.
He also revealed that there have been 19,000 complaints against general insurance providers, up 17 per cent, out of which 48 per cent have been resolved at registration and referral (first stage) with over 70 per cent of matters resolved by agreement or in favour of the complainant.
In terms of numbers, Locke clarified that brokers are “hardly on our radar”. Out of the 9193 COVID-related disputes, only 21 relate to brokers.
However, he did question if brokers are directing their clients to AFCA if they are unhappy.
His advice for brokers was to focus on the following based on the complaints AFCA had received;
Finally, IBCCC Chair, Michael Gill, told brokers that in terms of other parts of the financial services sector, brokers aren’t the problem, “Sensible, well-trained brokers walk alongside their clients to achieve good outcomes.”
Gill told audiences that legislation and regulation were not the whole answer when it comes to addressing issues within the insurance broking space, Gill said that self-regulation would play an important role as it allows businesses and the industry as a whole to have conversations about genuine changes in behaviour.
He believes that there is an opportunity to build in the good parts of the Royal Commission Legislation into the Insurance Brokers Code of Practice.
He said, “The biggest job for the committee is to carve out space of how we can build in matters of fairness. Not just about compliance but about genuine, encultured behaviour of always doing the right thing.”
Gill also remains concerned about lack of self-reporting but admitted that there is growth in these numbers. He also revealed that four code subscribers were responsible for two third of the breaches.
In concluding, the IBCCC Chair said that empathy and emotional intelligence were key for brokers to be able to live the code in everything they do add that if something didn’t seem fair, it likely wasn’t.