The low levels of complaints to the Financial Ombudsman Service (FOS) belies recent survey results showing that insurance brokers are among the least trusted professionals.
Indeed, says John Price Lead Ombudsman – General Insurance: “In terms of numbers, [broker disputes] tend to be low, which is a good thing. There tends to be not as many as should come through which suggests that the brokers are able to deal with things because of their relationship with their clients.”
NIBA CEO Dallas Booth had last week slammed the survey saying that it “does not reflect the standing in which brokers are held by their clients”.
Still there is always room for improvement. Where brokers tend to fall down is in their duty of care to ensure that proper cover is provided. Price elaborates: “Most broker breaches fall into the simple category where the applicant believes the broker has not obtained the policy requested … And that tends to arise across all types of policies and usually flows from either denial of claim or the amount that is covered.”
“What brokers need to know is the importance of record keeping. Many brokers do not keep adequate records to ensure that they have either contacted their client, in particular, on renewal of policies to ensure that the cover being offered is adequate for the person’s needs. This is particularly relevant to small businesses. Often brokers fail to keep proper records of instructions that have been provided that has been an important factor.”
Price notes that brokers should acquaint themselves with the FOS Approach to Insurance Broker Disputes document, as broker disputes have not changed much over the years.
He explains: “It’s about record keeping. Getting clear instructions and clearly informing the client. Making sure that there is regular contact with the client, not simply sending a piece of paper, which a lot of brokers tend to do, instead of being more active.
“I think those that are more active tend to not have a lot of disputes.”
Get some tips from FOS about ensuring compliance. John Price will be a panel speaker at the NIBA Convention “Ignite your thinking here and now” to be held in Sydney 10-12 September. Register here.