NIBA has released its submission to the Senate Economics References Committee inquiry into Australia’s general insurance industry.
The submission provides an overview of the intermediated general insurance industry, an insurance broker’s role and outlines the code of practice and the association’s reservations regarding an insurance comparison service.
On 22 November 2016, the Senate referred the following matters to the Senate Economics References Committee for inquiry and report by 22 June 2017:
- the increase in the cost of home, strata and car insurance cover over the past decade in comparison to wage growth over the same period;
- competition in Australia’s $28 billion home, strata and car insurance industries;
- transparency in Australia’s home, strata and car insurance industries;
- the effect in other jurisdictions of independent home, strata and car insurance comparison services on insurance cover costs;
- the costs and benefits associated with the establishment of an independent home, strata and car insurance comparison service in Australia;
- legislative and other changes necessary to facilitate an independent home, strata and car insurance comparison service in Australia; and
- any related matters.
The submission also highlights the role of an insurance broker as a risk adviser who assist customers to assess and manage their risk. The submission makes it clear that brokers act in the client’s best interest.
Insurance brokers act for and on behalf of the customer as their agent. In essence, insurance brokers do not SELL insurance to their clients, they PURCHASE insurance on
behalf of their clients. The submission stated that there is no current evidence of systemic poor advice being given by insurance brokers in relation to general insurance risks.
“NIBA continues to be the voice of insurance brokers, explain what insurance brokers do, promote the role and value of brokers and we will continue to argue for relevant and appropriate legislation and regulation that aids and assists the insurance process,” says Dallas Booth, NIBA CEO .
On the topic of establishment of an independent home, strata and car insurance service in Australia, NIBA’s observation is that insurance comparison services are invariably price comparison services, with little or no assistance or support to consumers on the nature of risks or the terms of conditions of the policies that are being offered through the site.
NIBA’s submission to the Senate Economics References Committee is available on the associations website here.