Brokers could find themselves caught up in moves to limit commissions for add-on insurance products sold through car dealerships.

A submission to the Australian Competition and Consumer Commission (ACCC) by the National Insurance Brokers Association (NIBA) says definitions used in the plan to cap commissions could have unintended consequences for its members if they are involved in arranging or facilitating the distribution of add-on products to a dealership.

“We do not believe actions of this nature were or are intended to be caught by this application for authorisation,” NIBA says.

The submission calls for clearer definitions so proposed restrictions target commissions on products sold by vehicle dealers to buyers.

Customers purchasing insurance through dealerships often pay inflated prices in an environment of pressure selling and high commissions, according to a report from the Australian Securities and Investments Commission.

In response, insurers including Aioi Nissay Dowa, Allianz, IAG, QBE and Suncorp have asked the ACCC to approve arrangements that will limit commissions to 20% of premiums.

The Insurance Council of Australia has backed the request, which is part of a range of measures, saying it will lead to significant benefits for customers.

The ACCC expects to release a draft decision next month and a final ruling in February.