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19 May 2013
Many brokers are not geared up to handle personal lines business should recent measures announced by Financial Services Minister Bill Shorten aimed at making flood insurance simpler result in an influx of consumer enquiries.
And the National Insurance Brokers Association’s (NIBA) directory service that forms a large part of Mr Shorten’s solution to the flood and strata insurance issues for consumers is limited in its ability to provide suitable brokers.
While NIBA’s Need a Broker website and the launch of a new-toll free phone service by the association are both intended to help consumers find a local broker to assist them in buying flood and strata insurance, most brokers have abandoned personal lines due to the dominance of direct brands.
The NIBA service also only lists companies that are members of the association.
Brokers have told insuranceNEWS.com.au they would not be in a position to handle a flood of new retail enquiries.
Steve Hamill, CEO of Brisbane broker Comsure, says his firm exited the personal lines market around 10 years ago and currently only places personal lines business for its commercial clients.
He describes personal lines broking as “quite labour-intensive”, and producing “some of the most complicated claims I’ve seen in 26 years of broking”.
“They can take up hours of time and chew through resources,” Mr Hamill told insuranceNEWS.com.au.
He says Comsure is “not geared up” for an increase in retail business, and he believes a lot of other brokers wouldn’t be, either.
Ben Goodall, GM of Griffiths Goodall Insurance Brokers in the Victorian town of Shepparton, agrees that personal lines business “does take a lot of time for relatively little reward”.
He says personal lines enquiries to the company increased after CGU and RACV made flood cover mandatory in their policies for the region, which has flooded several times in recent years. This resulted in steep premium hikes for some.
But of the personal lines enquiries the brokerage receives, only around 25% actually convert to purchasing a policy through the company.
NIBA CEO Dallas Booth said in a statement last week that brokers “do not charge for [arranging cover]”. However, Mr Goodall says his brokerage charges retail customers a fee on top of any commission they receive from insurers to compensate for the time-consuming nature of arranging personal lines business.
Griffiths Goodall would not be equipped for a rush of consumer enquiries, he says.
“If it happened in a hurry and on a larger scale than what we’ve seen then we would need to scale up.”
The Need a Broker website is yet to undergo the relaunch referred to in last week’s Government announcement, but as it currently stands it lists very few brokers able to assist consumers with home and contents and strata insurance.
A search of the website by insuranceNEWS.com.au revealed just 43 brokers Australia-wide listed for home and contents insurance – a figure that is reduced to 17 if multiple branches are removed, with no listings in SA or Tasmania.
A similar search for strata cover specialists reveals 46 brokers Australia-wide, or 18 brokers with the removal of multiple branches, and no listings for Tasmania.
NIBA Professional Development Executive Linda Evans confirmed the Need a Broker website only lists brokers who are NIBA members, rather than being representative of the entire broking community.
Members nominate the areas of insurance they wish to be listed under and also have the option of opting out of being listed on the site, as Comsure has done.
A spokesman for Mr Shorten defended promoting the Need a Broker website and phone service as “one viable solution” to the coverage and affordability problems in the flood and strata markets.
He says NIBA has been receiving around 1000 calls a month from consumers since the floods.
“Brokers are only one of many options available to consumers seeking insurance,” the spokesman told insuranceNEWS.com.au. “NIBA’s toll-free number and website will assist consumers who are considering using the services of an insurance broker but do not currently have access to one.”
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