Late renewal notices continue to be the cause of “high numbers” of breaches, the independent Insurance Brokers Code Compliance Committee says.

In its annual data report for the 2021 calendar year, the committee says most of these breaches occurred “because brokers failed to advise clients about their policy renewals before the policy expired”.

The committee says it has highlighted the issue in two previous reports but there continues to be “room for improvement”.

Under the latest version of the code, brokers must contact a client at least 14 days before cover is due to expire to “engage them on the next steps”.  There is a similar obligation within the Insurance Contracts Act.

The committee recommends brokers send notices earlier than the 14-day minimum and that “sending a renewal notice 21, 28 or 30 days before expiry is good practice and demonstrates a commitment to a higher standard”.

It also suggests setting an internal KPI for sending renewal notices 30 days before expiry, to make it clear to staff that it’s a priority, and to create a buffer.

The process should be automated where possible to avoid breaches caused by human error.

The committee gives examples of breaches, including one where an employee sent instructions to renew a $44 million strata policy a day after the policy expired.

Another breach was caused by two separate policies for the same client with different renewal dates being placed together into a processing tray for manual renewal.  

The policy with the earlier renewal date was placed under the other policy and was not sent to the client within 14 days of its expiry.

The report says overall self-reported breaches of the code increased from 3328 in 2020 to 3570 in 2021.

It urges brokers to review their internal compliance processes and culture after more than half did not self-report a single breach of the Insurance Brokers Code of Practice and 45% reported zero complaints.

“While reporting zero breaches of the Code may sound impressive, it does not necessarily mean a subscriber is doing well,” committee Chair Oscar Shub said.  

“It generally means that there are deficiencies in the processes and systems used to monitor compliance.”

Click here to read the report.