Risk Management Institution of Australasia (RMIA) President Brad Greer says the Australian Securities and Investments Commission (ASIC) report into broker remuneration has uncovered some practices that need to be more closely scrutinised.

“While the report found no systemic abuses of remuneration or other broker practices, it was nevertheless disquieting to see there was insufficient disclosure of remuneration and management of conflicts of interest by some of the 15 brokers that provided information to ASIC,” he said.

“It is disappointing that some of the safeguards for insurance buyers that existed in the former Insurance (Agents & Brokers) Act were not brought into the… Financial Services Reform Act,” he said.

Mr Greer says some brokers have now decided not to accept contingent commissions, but ASIC uncovered instances where commissions were insufficiently disclosed and conflicts of interest not managed and disclosed.

“Given that ASIC only sought information from a limited number of brokers, there is a fear that bad practices are more widespread in the industry.

“RMIA’s view is that an insurance transaction is a three-way partnership between insurer, broker and risk manager, and that all relevant information needs to be disclosed to each of the parties involved. Without that, there can be no establishment of a trust relationship, which is essential in the conduct of any business, including insurance.”