Consultation has begun on the broking code of practice review, with a document published yesterday asking for submissions on more than 20 questions.

As insuranceNEWS.com.au has reported, the paper tackles the “controversial issue” of whether brokers should be required to disclose commissions for more than just retail clients.

But it also asks questions on other issues related to conflicts of interest, remuneration, claims, complaints, vulnerable clients and the regulatory environment.

On remuneration, it asks: “If the code went further in requiring disclosure or limiting incentive fees or structures, what would the practical implications be for broker firms?”

The paper says the issue of general versus personal advice was flagged by many. 

“How well does the regulatory distinction between general and personal advice work in insurance broking? Are there ways in which the code could address areas of ambiguity?”

On renewals, it says the 14 days’ notice currently required by the code could be reconsidered.

“This is seen as inadequate time to consider insurance needs, options or to consider using a different broker. The [general insurance] code review panel has recommended that insurers provide 28 days’ notice. Should the [broker] code provide for a 28-day notice period for renewals?”

Consumer advocates have suggested the code should require a higher standard of record-keeping. The document asks: “As a general proposition, should the code wordings be revised to be more explicit about the standards being set?”

The paper notes changes to the regulatory and political environment.

“The sector generally has been under some pressure, with a number of inquiries and reviews into Australia’s disaster-readiness and the performance of insurance in dealing with large numbers of concurrent significant claims,” it says.

“Inevitably, the insurance sector, including broking, is a target for political pressure, some justified and measured and some opportunistic – for example, threats to break up large insurance companies or regulate premium increases.”

It asks whether the code has kept pace with the changing environment, and whether the broking sector can “do more to ensure community support for insurance generally”.

Phil Khoury from CRK Consulting is leading the independent review of the 2022 code, and feedback on the consultation paper is due by April 11. 

The reviewer will then hold small roundtable discussions before aiming to “draft our report during June”. Further consultation will be followed by a final report, but no timescale has been provided.

Click here for more information on the review, and to access the full document.

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