Disputes involving insurance brokers have increased by almost a third in the last 12 months, despite a slight drop in overall insurance complaints.
Figures released by the Financial Ombudsman Service (FOS) in itsAnnual Review show a 31% increase in disputes made against insurance brokers, although the watchdog admits it has no particular concerns about broker behaviour.
Overall, however, the number of general insurance disputes accepted by FOS fell by 12% in the past 12 months to 6,704 compared with 7,581 the previous year. Disputes against brokers make up only 3.8% of the total.
The number of broker disputes handled by FOS was 254 – up from 195 on the previous year, and 112 in 2011/12. The vast majority of complaints regard the policy arranged not being appropriate to the client’s needs, or poor customer service.
Despite the overall increase in disputes against brokers, a FOS spokesperson says there are no particular concerns about broker behaviour.
“The most probable contributor to the increase is increasing consumer awareness and willingness by consumers to take their complaints to FOS,” the spokesperson says. “An examination of these numbers over a longer period of time shows that the increase in complaints against brokers is consistent with increases in complaints for other industries over a similar period.”
NIBA CEO Dallas Booth says the figures leave no room for complacency among brokers.
“It is pleasing that number of disputes being handled by FOS in relation to general insurance brokers is a very small proportion the total number of general insurance disputes – but the increase in broker disputes means that brokers should be extremely vigilant in adhering to the service standards set out in the Insurance Brokers Code of Practice, and in maintaining appropriate records and file notes of discussions, client instructions and advice,” he says.
“In order to avoid disputes going to FOS, brokers need to ensure they do three things. Firstly, ensure the client receives quality, professional advice and support, consistent with the terms of engagement with the client.
“Secondly, communicate with the client in a clear and effective manner, so they understand the nature of the cover being purchased on their behalf, and the areas of risk that are and are not covered by the insurance policy.
“And finally, it’s imperative to provide a clear complaints and internal dispute resolution framework, so the client knows what to do if they are unhappy with what is happening with their insurance policy or their claim.
“The aim should be to ensure complaints and disputes are successfully resolved at this stage, without needing to progress to FOS.”
The FOS Annual Review can be accessed atwww.fos.org.au/publications/annual-review/
For more on the Insurance Brokers Code of Practice, click here.