The Insurance Brokers Code Compliance Committee (IBCCC) says its approach to brokerages that break the Insurance Brokers Code of Practice (the Code) is working. Chair Oscar Shub (main picture) has strongly defended the recent sanctions against three firms.
The brokerages concerned repeatedly failed to report breaches and complaints data. The firms’ names and the nature of the complaints was not made public. However, Shub described the sanctions as “proportionate” and said they “reflected the seriousness of the breaches.”
He also said the IBCCC has called for named reporting in its submission to the Code review.
“Our Charter does allow us to refer matters to regulators, including ASIC, if we consider a matter to be serious,” Shub said. “We take that discretion seriously and would use it when appropriate.”
He the IBCCC’s role is to promote compliance, raise standards in the industry and “uphold the integrity of the Code for the benefit of clients.”
“These sanctions reflect that commitment,” said Shub.
Insurance Business asked the chair how often the IBCCC issues warning letters of this kind and for details of any heavy penalties inflicted on broker Code breakers in recent years?
“We do not issue warning letters as a standalone sanction,” he said. “When a broker fails to meet his or her Code obligations, we consider a range of actions, including referring the matter to NIBA, publishing findings, or engaging directly with the broker to secure improvements.”
He said penalty actions are not common.
“While sanctions have not been common in the past, this recent action marks a clear example of our willingness to escalate a response when appropriate,” said Shub.
The chair pointed to improvements in timely reporting from brokers.
“But when a small number of brokers continue to fall short, even after reminders and clear guidance, we will not hesitate to use the tools available to us to reinforce expectations across the industry,” he said. “We believe the powers currently available can be effective when used appropriately.”
He said what matters most is the willingness of IBCCC to act when brokers are not meeting their obligations and expectations.
“The current review of the Code has asked stakeholders to consider the appropriateness of existing sanction powers,” said Shub. “We look forward to the reviewer’s recommendations on this issue.”
The IBCCC’s submission to the Code review does identify another problem related to brokers’ compliance reports: the high and increasing number of brokerages submitting annual breach reports that show no breaches and no customer complaints.
The review submission does recommend “refining” the Code to ensure all breaches are reported. The IBCCC also wants funding for investigative powers.
“Stronger reporting requirements for brokers and sufficient capacity [funding] for us to undertake independent assurance work will ensure that brokers proactively identify issues, improve their compliance frameworks, and foster a culture of accountability,” said the submission. “The industry must move beyond a reactive approach, provide a deeper understanding of operational risks and opportunities, and drive systematic improvements.”
Some industry stakeholders would like to see the IBCCC given more powers to penalise Code breaking brokerages.
“There is a clear case for the IBCCC to be given greater power to impose meaningful sanctions,” said Tyrone Shandiman, chair of the Australian Consumers Insurance Lobby (ACIL). “What is the point of having a Code if there are no meaningful consequences for breaching it?”
Insurance Business is seeking more information from NIBA including how often it penalises brokers and will publish a story update when that becomes available.
Are you an insurance broker or another industry stakeholder? What do you think of the powers of the IBCCC? Should they be strengthened and should it have the funding to investigate firms? Please tell us what changes you’d like to see below.
