Moves to abolish insurance commissions should have no bearing on the general insurance broking sector, National Insurance Brokers Association (NIBA) CEO Noel Pettersen says.

His comments to insuranceNEWS.com.au on decisions by two financial planning firms to move to a fee-for-service insurance model were made several days before the Federal Government announced an industry-wide ban on commissions for financial products.

Mr Pettersen told insuranceNEWS.com.au there’s a difference between insurance brokers and financial planners. He says planners specialise in long-term investments and don’t have the same understanding of general insurance products and insurers.

He says Australian insurance buyers are “the best protected anywhere in the world” in terms of transparency, suggesting there is no reason to amend brokers’ existing pay structures.

“There are few complaints against the broking industry because consumers understand that a professional broker is acting on their behalf,” he said.

Financial Services Reform Act disclosure provisions already allow the consumer to understand payment terms and make an informed choice.

“Brokers already receive remuneration by way of fees, commissions or a combination of both,” he said. “Commission is really a distribution cost for back-office work carried out by the broker on behalf of the insurance company.

“If the broker is doing their job by offering the best products and coverage at a reasonable rate, then they will continue to get the business.”