Journalist Mark Westfield mightn’t know much about the finer points of insurance, but he does have excellent contacts. In his column in The Australian last week, Mr Westfield suggested brokers are obtaining clients’ agreement to use unauthorised foreign insurers by stealth.

“Reportedly, according to industry sources, clients are either not shown the section 34 form, or have it pushed in front of them as part of a number of documents for signing without them fully realising what they are signing,” Mr Westfield wrote in his Wednesday column.

While Mr Westfield’s sources remain unidentified, the National insurance Brokers Association (NIBA) has called for him to name the errant brokers to ASIC so they can be prosecuted. After all, there’s no issue of journalistic ethics involved in revealing the names of these brokers.

In a letter to The Australian – which has not yet been published – CEO Noel Pettersen said brokers are caught in a classic “damned if you do, damned if you don’t” situation over unauthorised foreign insurers. “Their clients demand insurance they often need to have before they can undertake their normal work; brokers often have no alternative other than to approach insurers which are not regulated in Australia.”

He said NIBA has been consulting with the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission “to ensure there is a clear understanding of all the aspects of this issue. NIBA members have also been continually reminded of the requirement to clearly spell out to clients the implications of securing cover from an unauthorised foreign insurer.

“Not that they need reminding: brokers’ own PI policies will not usually respond to a claim dispute related to an unauthorised foreign insurer.”