The Insurance Council of Australia has called for greater remuneration transparency as part of a stronger broking code of practice. 

An independent review of the National Insurance Brokers Association code is under way, with feedback on a consultation paper due by May 2.

“The current arrangements under the NIBA code provide a level of management for potential or perceived conflicts of interest and we would welcome strengthening these provisions,” ICA’s submission says.

It recommends considering more pay and commission transparency, such as for wholesale clients, and proposes the code update reflect a regulation starting in July that requires intermediaries to obtain the consent of retail clients before receiving commissions.

ICA highlights its recent strata policy paper and says NIBA should ensure standardised, granular disclosure of premiums, taxes, remuneration to brokers and strata managers, and fees. 

In other feedback, the council says it understands some carrier agreements between brokers and insurers have provided remuneration benefits above standard commission rates. 

This typically relates to use of a broker platform designed to create efficiency in quoting or issuing cover, and involves the insurer paying the broker a sum linked to the transaction value where products are sold on the platform, it says.

“In these circumstances, we recommend enhanced transparency for consumers to enable them to understand any potential impact this may have on overall price paid,” it says.

ICA further recommends “any potential conflict of interest in incentives to use such platforms is carefully considered under the revised NIBA code”.

The consultation paper asks whether a 14-day notice period for renewals should be extended to 28 days. 

The longer time frame has already been recommended in an independent review of the general insurance code of practice, and ICA has agreed in principle for its code, which it is currently revising. It “would welcome alignment” between the NIBA code and its document.

ICA says the broker code should “work harmoniously” with the insurer code, including when the latter document imposes a higher standard or additional requirements.

The submission is available here.