Brokers are being instructed by clients to secure liability cover at any cost, and if that means using unauthorised foreign insurers, then so be it. That’s all very well, says National Insurance Brokers Association (NIBA) President Frank Earl, but the use of unauthorised foreign insurers can also put brokers’ own professional indemnity cover at risk.

Brokers should be aware of the potential ramifications of using “backyard operators”, Mr Earl told a NIBA breakfast briefing in Melbourne. “Brokers are damned if they use foreign insurers and damned if they don’t,” he said. “Customers need to be reminded that the industry is currently a sellers’ market, not a buyers’ market. They have to understand that.”

Mr Earl said the Australian Prudential Regulation Authority is compiling a report on the whole issue.