The National Insurance Brokers Association (NIBA) says the Australian Competition and Consumer Commission (ACCC) has provided no evidence to show that commissions it wants banned are causing harm to consumers.

NIBA says in a submission that current remuneration arrangements provide significant benefit by promoting access to information and advice.

The ACCC Northern Australian Insurance Inquiry interim report proposes extending a conflicted remuneration ban to brokers, arguing commissions and other benefits can give rise to an “unacceptable conflict of interest”.

“NIBA strongly opposes this recommendation and notes there is no evidence provided in the interim report to the effect that ‘unacceptable conflict of interest’ is in fact happening in the delivery of advice, support and services by insurance brokers to their clients across northern Australia,” the group says.

The proposal is one of 15 recommendations that the ACCC says should be quickly implemented to bring premium relief to property owners. It also makes a further 13 draft proposals.

NIBA says brokers have extensive knowledge and experience with issues raised in the interim report and it looks forward to further discussing matters with the ACCC.

“Insurance brokers are keen to make that knowledge and experience available to the ACCC, both directly and via their industry association,” the submission says.

The conflicted remuneration issue has also been subsequently raised in the Hayne financial services royal commission, which recommended a review take place in three years' time.

NIBA says the royal commission also received no evidence or case studies suggesting any problems with broker payments.

An Australian Securities and Investments Commission (ASIC) submission to the royal commission had acknowledged that there may well be costs associated with the removal of the exemption that could outweigh any reduction in perceived consumer harm, it says.

In response to areas for further focus, NIBA supports plans for the ACCC to look at detailed case studies on sub-regions in northern Australia.

“We strongly recommend engagement with insurance brokers operating in the areas of interest in order to obtain a first hand understanding of the operation of the insurance markets in those regions,” it says.

The group’s submission notes that it may be desirable to examine the potential need for some form of government intervention that would take some of the high cost of extreme weather events out of the insurance pool.

“These costs would need to be met by some alternative funding mechanism, in such a way that the underlying insurance market could continue to operate in an efficient and competitive manner,” it says.

“This tends to indicate some form of reinsurance solution to cover the high cost of extreme weather, while leaving more routine risks to be insured by the normal market.”

NIBA says it would be pleased to participate in further discussions, and extensive knowledge exists within its membership in relation to alternative risk funding mechanisms around the world.