Broker Code review has started: fee transparency is a sticking point
Broker Code review has started: fee transparency is a sticking point | Insurance Business Australia
Insurance News
Broker Code review has started: fee transparency is a sticking point
“It’s a live issue”
Insurance News
By
Daniel Wood
The National Insurance Brokers Association (NIBA) has confirmed that the habitual three-yearly review of the Insurance Brokers Code of Practice has started. An updated version of the Code will be launched in January, 2026.
“We’re well into the planning for the review process,” said Richard Klipin (pictured above), NIBA’s new CEO.
Once again, a key issue is likely to be Section 6.1 that deals with the disclosure of broker fees.
However, the Insurance Brokers Code Compliance Committee (IBCCC) was not pleased with this modified version and the reduced fee transparency obligations.
The new Section 6.1 only obliges brokers to disclose commissions to a restricted definition of retail clients, a significant dialling back on the fee transparency in the earlier version of the 2022 Code.
“This differs from the current obligation which requires brokers to disclose commissions to all individual and small business clients regardless of whether the client is a retail or wholesale client,” said NIBA president Gary Oakley in a message sent to members.
Shub wants to make sure NIBA thoroughly revisits this issue.
“We’ve had a lot of discussions with them about the disclosure,” he said. “They say that, as far as they’re concerned, they will be doing a full investigation with their members.”
However, he said he couldn’t be certain that Section 6.1 would be changed the way the IBCCC wants it changed.
“Let me say it will be part of the review, they know that it’s going to be part of the review and they know our position on it, so it’s a live issue,” said Shub.
Klipin is now one month into his job as NIBA’s CEO following the departure of Phil Kewin. He would not be drawn on his personal view of fee disclosure and Section 6.1 out of respect for the review process.
“There are lots of stakeholders to engage with and so having an open process is important as well,” he said. “I’m sure we will have lots of views on lots of different parts of the Code, including 6.1 and the disclosure discussion.”
However, he said this Code process should raise issues.
“It should test and challenge the status quo, I think that’s entirely appropriate,” said Klipin. “I won’t clearly have a view until we go through the process.”
Transparency and “evolving” consumer expectations
IB asked him for his general view of insurance broking and transparency?
“On the broader question [of transparency], the broking community serves Australia’s businesses, families and communities with quality advice at key times, for example, when risk is placed and claim time,” said Klipin. “So we are front and centre working with consumers all the time.”
He suggested that the Code needs to reflect the expectations of consumers.
“Consumer expectations and needs are evolving and changing,” said Klipin. “I think in the end the Code and the Code review process will likely reflect some of that.”
The NIBA CEO said his organisation should be proud of the Code and the industry leadership it represents.
“Are Codes ever perfect? Will this be perfect?” he said. “We’re obviously on the direction of travel to lifting standards and to increasing transparency and I think that’s an evolutionary journey.”
IB asked if there were any other specific issues likely to be a focus during this review?
“Not specifically,” said Klipin but he said he expected there to be “some gnarly issues” that would need to be dealt with by balancing the views of the different stakeholders.
“In the end, we are here to serve customers and consumers,” he said. “I think that’s the direction of travel.”
Fee disclosure “high on the agenda”
Shub said he expects the discussions and meetings that form the review process will put fee disclosure “high on the agenda.”
“But there are other issues that we want to see properly dealt with in the best possible way, like vulnerable clients,” he said.
However, Shub said the central issue is fee disclosure. Since November, the IBCCC has engaged with different brokerages to discuss this longstanding issue. IB asked what brokers have said about it?
“It depends who you speak to and it wouldn’t be appropriate for me to name with who and what,” said Shub. “There are some who think that it’s an absolute should be, and there are some who are very much against it.”
Does greater fee disclosure mean more work?
IB asked what arguments against greater fee disclosure and transparency he was hearing from brokerages?
“Mostly they say that it involves them in a lot of work,” said Shub. “That seems to be the main expressed position but whether there’s an underlying position, I don’t know.”
What do you think of insurance brokers and their obligations to disclose fees? Are those obligations transparent enough? Please tell us below.
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