Code committee targets culture after more than half of brokers report no breaches

Brokers have been urged to review their internal compliance processes and culture after more than half did not self-report a single breach of the Insurance Brokers Code of Practice and 45% reported zero complaints in 2021.

The independent Insurance Brokers Code Compliance Committee (IBCCC) says the figures may indicate the prevalence of company cultures that fail to value self-reporting and its power to improve standards.

“While reporting zero breaches of the Code may sound impressive, it does not necessarily mean a subscriber is doing well,” IBCCC Chair Oscar Shub said following the release today of the committee’s annual data report for the 2021 calendar year.

“It generally means that there are deficiencies in the processes and systems used to monitor compliance.”

He says breaches occur from time to time, even with the best compliance frameworks in place.

“So reporting no breaches does not reflect perfection as much as it reflects poor monitoring and a failure to embrace a culture of reporting,” Mr Shub said.

IBCCC is also concerned that some brokers limit reporting of Code breaches to certain staff. It cites the example of a large broker – defined as having more than 100 full time employees – who did not report a single breach and said all potential breaches are reviewed and assessed by three members of its legal and compliance team.

“Leaving breach reporting to a specific team or individual risks breaches being missed,” the IBCCC says in the annual data report.

“And, importantly, it may send a message to the rest of the business that compliance with Code obligations is not everyone’s responsibility.”

The 2021 annual data report is based on breaches and complaints information from 441 Code subscribers.

Based on the data lodged, 48% of code subscribers self-reported breaches, up from 44% in 2020, and about half of the breaches related to the Code’s service standard 5 – buying insurance.

While the annual data report covers the previous 2014 Code, IBCCC says the findings are relevant in helping brokers improve compliance with the latest Code iteration which commenced in November last year.

Click here to access the report.