NIBA opposes rise in dispute compensation cap
NIBA has told regulators a $200,000 hike in dispute compensation limits will jeopardise brokers’ access to professional indemnity (PI) cover.
Association executives met last month with representatives of the Australian Securities and Investments Commission (ASIC) to outline its concerns at a proposed $300,000 cap on payouts to be implemented by the Financial Ombudsman Service (FOS) from 2012.
Brokers currently face a maximum compensation cap of $100,000, but FOS wants a uniform cap applied across the financial services sector.
“There is simply no case to justify increasing the current maximum level for insurance brokers from $100,000 to $300,000,” NIBA CEO Noel Pettersen said in a letter to ASIC.
“Insurance brokers have a well defined risk profile and there is very little evidence of consumers being adversely affected by insurance broker negligence, fraud or bankruptcy.”
Citing statistics that show claims are few in number and are typically worth less than $5000, Mr Pettersen says a “separate and distinct” compensation cap for brokers should be determined by FOS, NIBA and brokers’ PI insurers.
Association executives met last month with representatives of the Australian Securities and Investments Commission (ASIC) to outline its concerns at a proposed $300,000 cap on payouts to be implemented by the Financial Ombudsman Service (FOS) from 2012.
Brokers currently face a maximum compensation cap of $100,000, but FOS wants a uniform cap applied across the financial services sector.
“There is simply no case to justify increasing the current maximum level for insurance brokers from $100,000 to $300,000,” NIBA CEO Noel Pettersen said in a letter to ASIC.
“Insurance brokers have a well defined risk profile and there is very little evidence of consumers being adversely affected by insurance broker negligence, fraud or bankruptcy.”
Citing statistics that show claims are few in number and are typically worth less than $5000, Mr Pettersen says a “separate and distinct” compensation cap for brokers should be determined by FOS, NIBA and brokers’ PI insurers.