Veteran insurance professional Nick Cook’s pride in how the industry has helped customers and minimised complaints during COVID-19 is tempered by one warning — he thinks an even bigger test is around the corner.

Cook, executive general manager — partner, broker services & agencies at Steadfast, notes that the Own Motion Inquiry report from the Insurance Brokers Code Compliance Committee (IBCCC) has praised brokers for how they responded to bushfires and the pandemic in 2020. The findings, released in April 2022, suggest brokers often went ‘above and beyond’ to get good outcomes for clients.

However, Cook fears the devastating recent east coast floods and related supply chain issues will create a ‘perfect storm’ of housing and property losses, insurance claims, tradie shortages, building cost blowouts and potential knock-on impacts for underinsurance that will inevitably lead to challenges for insurers and brokers. 

‘I honestly expect that these weather events will lead to more complaints — it’s just the nature of the losses occurring,’ he says.

This reality makes it more imperative than ever for brokers to have strong complaints-handling and self-reporting systems as Australia prepares for a new Insurance Brokers Code of Practice, which will take effect in November 2022. 

Compliance in focus

In late 2021, the IBCCC released its Annual Report 2020-21 and a companion Annual Data Report that highlight potential concerns about how some brokers manage complaints.
The reports show that while breaches and complaints under the Code have risen year on year, the percentage of Code subscribers self-reporting such breaches has dropped significantly. 

There were 3,328 self-reported Code breaches in 2020, up from 2,006 the previous year. However, just 44 per cent of Code subscribers self-reported breaches in 2020, down from 51 per cent in 2019. 

With more than half of all Code subscribers not self-reporting any breaches during the reporting period, Clyde & Co legal consultant and IBCCC chair Oscar Shub says the issue ‘will remain an area of focus going forward to ensure all breaches are captured and reported’.

He points out that an influx of Steadfast brokers into the Code community in December 2019 has resulted in those new members familiarising themselves with the requirements of the monitoring and reporting process. ‘It’s a learning process,’ says Shub. ‘I am quite confident that data will rise when more education and guidance is put in place.’

In general, Shub says brokers are managing complaints ‘reasonably well’, with very few reaching the Australian Financial Complaints Authority (AFCA) Ombudsman.

For those seeking best practice, he advises having accessible and visible internal dispute resolution information for brokers, as well as clear, written procedures for responding to disputes.

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