National Insurance Brokers Association (NIBA) CEO Noel Pettersen has again warned that brokers are being forced to use unauthorised foreign insurers because their clients can’t get cover from local insurers.

As long as local insurers continue to shy away from risks, brokers will be forced to go overseas to unregulated insurers to satisfy their clients, he said yesterday. “Many clients demand insurance cover from whatever source they can get it, because many trades and professions – from plumbers to doctors – can’t work without having it.”

While the Australian Prudential Regulation Authority (APRA) has stated its support for local insurers’ risk aversion in classes that have consistently lost them money, the regulatory body also understands the position of brokers.

Mr Pettersen said NIBA, whose members handle 90% of the commercial insurance transacted in Australia, has been consulting with APRA and the Australian Securities and Investments Commission to ensure there is a “clear understanding” of all the aspects of the issue.

“Our members know they need to comply with section 34 of the Insurance (Agents and Brokers) Act, which requires them to make clients aware of the implications of using an unauthorised foreign insurer, and the client must confirm that understanding in writing,” he said.