The National Insurance Brokers Association (NIBA) has rejected the concept of a compensation scheme of last resort for the broking sector, saying clients receive the protection they need under the Corporations Act.

Under Section 985B of the Act, an insurance company cannot cancel a policy on the basis of non-payment of premium if the broker has misappropriated the money.

“In other words, payment of the premium to the broker is deemed to be payment to the insurance company,” NIBA says in a submission to Treasury.

“There is no evidence of widespread losses sustained by clients of insurance brokers as a result of those activities.

“Section 985B is achieving its intended outcome. This provision has been a critically important consumer protection provision in the insurance law of Australia.”

NIBA says until there is “evidence of a need for a last-resort compensation scheme in relation to insurance brokers – we are not aware of any such evidence – there is no basis for” such a program.

It is also against establishing a scheme to provide access to redress for past disputes involving insurance brokers.