The Insurance Brokers Code Compliance Committee (IBCCC) will conduct an inquiry to better understand a continuing under-reporting of breaches by subscribers that raises concerns about culture and processes.
The IBCCC annual report shows that 55% of subscribers reported breaches compared to 48% the year before, while 61% reported complaints, up from 55%. But 175 brokers reported no breaches, while 152 reported no complaints.
“While we were happy to see more report their breaches and complaints, it was disappointing to see so many continue to under-report or report zero,” IBCCC Chairman Oscar Shub said.
“This concern remains a serious one. We have put great effort into encouraging better attitudes and practices to compliance and reporting, with some success. But, unfortunately, not all brokers have taken this message on.”
The IBCCC says things go wrong even in the best organisations and it considers zero breaches to be highly unlikely, and indicative of an organisation lacking the right systems and processes in place to monitor compliance with the Code of Practice.
The new broker code came into effect on November 1, and the IBCCC says the broad nature of the previous version may have partly contributed to the lack of reporting, but it remains concerned there is a deeper cultural issue with reporting for many subscribers.
The inquiry will examine instances of subscribers reporting no breaches or complaints in the 2022 Compliance Statement and will assess information about processes, procedures, monitoring and training to understand the culture towards reporting. The inquiry will look at ways to encourage a more positive compliance outlook, with findings expected to be available late this year.
Mr Shub noted that last year was a turbulent one for both brokers and their clients, and the new code has a greater focus on supporting clients experiencing vulnerability.
“Over the last year, with increased environmental catastrophes and cost of living pressures, we have seen that vulnerability can affect anyone,” he said.
“Our work helping code subscribers integrate the new code led to an impressive preparedness across the industry. Brokers, for the most part, showed that they understood vulnerability and were well placed to meet a diverse range of stakeholder needs. This is a good result that will lead to positive outcomes.”
National Insurance Brokers Association CEO Phil Kewin says the start of the new code has provided a great opportunity to refresh and reinforce the requirements of subscribers, which has seen an increase in breach reporting.
“We feel there is still more opportunity to increase these numbers and will work with the IBCCC to ensure subscribers are not only educated, but the reporting mechanisms are as efficient as possible,” he said.
The annual report says there were 3405 breaches, compared to 3570 a year earlier, and 2252 complaints, up from 1742. Breaches had a financial impact of $3.2 million, affecting 412,800 clients.
The most common cause of breaches was process and procedures not being followed while the most common area of complaints related to service issues.
The IBCCC annual report is available here.