The National Insurance Brokers Association (NIBA) has received sharp criticism for significant hold-ups in reviewing its Insurance Brokers Code of Practice.

The Insurance Brokers Code Compliance Committee annual review, published today, warns of a “serious erosion of consumer confidence in NIBA and the industry” due to the delays and an alleged lack of transparency.

The current code dates back to 2014, and reviews are intended to be carried out every three years.

NIBA says it is close to presenting a draft document, that external stakeholders will be properly consulted, and that there are no fundamental issues with the broking industry or the current code.

But consumer representatives warn the absence of an updated code has left the once world-leading Australian broking industry in “no-man’s-land”, and assertions that there are no fundamental concerns are evidence of “hubris”.

Today’s report says it is “vital” the code is kept up-to-date and the committee has met with NIBA six times, and written to it seven times, to discuss the review.

“While NIBA has acknowledged our concerns about the delays and lack of transparency, we are yet to receive a formal Terms of Reference for the review, or a timeline for the release of the updated code,” the report says.

“Despite ongoing stakeholder consultation since that time, NIBA appears no closer to completing the review and providing insurance brokers, consumer groups and other stakeholders with an updated and improved code.

“The committee has witnessed over this time, a serious erosion of consumer confidence in NIBA and the industry.”

Independent Chairman Michael Gill told insuranceNEWS.com.au that the committee appreciates insurance brokers “don’t cause the same problems” as other financial services sectors.

But he says there has been “a build-up of frustration” among consumer representatives over the review process “that was supposed to start in 2017”.

“The code’s objective is to build better relationships,” he said. “It’s sad when something as basic as this can start causing problems.”

Financial Rights Legal Centre Policy and Communications Officer Julia Davis, who sits on the code compliance committee, told insuranceNEWS.com.au broking has “flown under the radar” of the Hayne royal commission, but that doesn’t mean there are not issues.

“There are bad players out there, the Australian Securities and Investments Commission bans insurance brokers every year,” she said.

“There are not large numbers of complaints to the Australian Financial Complaints Authority (AFCA), but there are some. We have consumers come to us with cases against brokers and they are all things that should be addressed by the code.”

Ms Davis says NIBA has shown no urgency in explaining the delays and that presenting a draft code prior to consultation is not acceptable.

“What is going on? Brokers were ahead in 2013 but now they are just in no-man’s-land. Think about what has changed since then. Every other industry has had major code reviews and there is no excuse for these delays any more.

“Drafting a code behind closed doors with no transparency is not best practice at all.

“It’s hubris to think ‘we don’t have problems in our industry’. That’s why the trust is eroding.”

NIBA CEO Dallas Booth told insuranceNEWS.com.au that the code review has “taken a lot longer than hoped or anticipated” and that he “accepts the concern that has been expressed” about the delays.

But he says NIBA is committed to transparency and that there have been complicating factors.

NIBA wanted the Insurance Council of Australia to “go first” – the new General Insurance Code of Practice was released in January. He also says issues raised during and since the Hayne royal commission needed thorough consideration.

“We wanted to do a proper code review, not just stick to a timetable,” he said.

“We are close to a draft code and external stakeholders will have every opportunity to comment on proposals we put forward.

“There is nothing fundamentally wrong with our current code. We are not getting expressions of concern about the performance of insurance brokers from anyone and AFCA is not busy with work from insurance brokers.”

The code compliance committee report found that during last year from 467 code subscribers there were 2006 self-reported breaches, up 10% on 2018, and 1292 self-reported complaints, up 23%.

Some 43% of all code breaches related to non-compliance with client service standards for buying insurance.

Almost half of code subscribers, including three of the largest brokers, reported zero code breaches, sparking concern from the committee.

“This raises serious questions about the adequacy of these subscribers’ breach detection and reporting mechanisms, the robustness of their compliance frameworks and, perhaps most importantly, their willingness to implement an organisational culture that encourages breach reporting as a way of learning from the outcome and preventing a recurrence,” the report says.

Click here to see the full report.