The National Insurance Brokers Association (NIBA) has proposed meeting with the Australian Securities and Investments Commission (ASIC), insurers and consumer representatives to discuss changes that could help retail clients access advice.

NIBA says more retail policyholders are seeking assistance from brokers, but ASIC regulatory guides focus on other financial areas and examples are “totally unhelpful”.

“A number of NIBA members have indicated that they have examined the potential for operating under a personal advice model but having regard to regulatory and compliance obligations it is not cost effective to do so,” CEO Dallas Booth says.

In a submission to ASIC, NIBA says it “is firmly of the view” that the community should have access to good quality insurance advice, and the development of processes to facilitate that should start with the needs of clients rather than with legislation.

“NIBA would like to meet with ASIC, insurers and consumer representatives to discuss and determine the most appropriate and cost-effective way of giving advice and support to retail clients on general insurance risks and challenges,” it says.

“Once this is determined and agreed, appropriate regulatory guidance should then be developed.”

ASIC before Christmas released a consultation paper on promoting access to affordable advice for consumers as part of its Unmet Advice Needs project. A series of roundtables is proposed for early this year.

NIBA estimates around 15% of domestic premiums are placed via brokers, compared to around 90% for commercial.

Assisting more retail clients would likely require a change to “seriously streamline” the Statement of Advice, with a sample existing in Regulatory Guide 90 extending to 23 pages.

“This is one area where behavioural economics experts are likely to add much value to the discussion,” NIBA says. “We need to determine what clients actually want to know, and how best to present the information to them.”

The submission says that based on an average $800 home insurance gross premium and a 17.5% commission, a broker would expect to receive $140 for their work, while in private motor, with a premium of $645 and commission of 10% they would earn $65.

“This level of remuneration requires a very high level of efficiency in order to make the provision of personal advice cost effective for all concerned,” it says. “There is no doubt that this level of remuneration would not support preparation of a 23-page Statement of Advice.”

NIBA also says information that is not of an advice nature should not be called advice, and the concept of “general advice” should be re-named.

The submission highlights that products discussed by financial advisers have a long-term focus and are generally associated with wealth creation, retirement, income protection and financial security, whereas insurance cover is invariably for 12 months but can still be complex at the retail level.

“The insurance needs of individuals can and do vary from the straightforward to the exceedingly difficult,” it says.