An in-depth Insurance News podcast has addressed the issue of broker commissions, which will soon come under the spotlight as part of a Kenneth Hayne-inspired review.

Broking representatives are preparing to defend commissions, because they work for insurers, intermediaries, and most importantly clients, and there is no evidence of problems within the current system.

But the Australian Competition and Consumer Commission (ACCC) and small business ombudsman have both recommended the banning of so-called "conflicted remuneration" for general insurance brokers, in advance of the review which should take place before the end of next year.

ACCC Deputy Chairman Delia Rickard tells the podcast the recommendation to replace commissions with a fee-based system, which was included in a final report on insurance affordability in northern Australia, was “unavoidable” due to the “inherent conflict” in the current set-up.

The National Insurance Brokers Association (NIBA) and key broker representatives, including Steadfast MD Robert Kelly and PSC MD Tony Robinson, disagree. They don't believe taking away commissions will address the issue of affordability.

“It worries me when you take a system where the commission is factored into the cost of distribution and hope that by taking the commission off, that the consumer will lose the 20%, that the insurance industry will drop 20% off their pricing,” Mr Kelly says.

“Unfortunately in my many decades in this industry I’ve never seen anything like that happen.”

NIBA CEO Dallas Booth fears that fees would put people off seeking advice at all.

“I’m absolutely convinced that governments and regulators have to think very, very carefully about what happens next if you abolish the commissions,” he said.

“Will the community actually be better off? As part of this review we will be challenging anybody and everybody to put on the table – where is the evidence of a problem that needs to be fixed?

“Because there is no evidence of a problem that needs to be fixed in our view.”

The podcast also includes a detailed explanation of what conflicted remuneration means and how the current legislation works, from McCabe Curwood Partner Mathew Kaley.

You can find a new episode of INsight published here every week.