Conflicts of interest have been flagged by the Insurance Brokers Code Compliance Committee as one of the top issues resulting in code breaches. 

One such breach followed a staff member at a code subscriber notifying management that brokers were “receiving vouchers from an insurer as volume-based incentives”. 

“The subscriber contacted the insurer to advise that its brokers would no longer be participating in the incentive scheme and created a handbook for all staff detailing clearer procedures and consequences for conflicts of interest with insurers,” the committee says in its annual data report. 

In another example, a subscriber found that a staff member was managing his own personal insurance as an account manager, even though such practice had been forbidden by a company-wide communication. 

“The incident was identified by a supervisor. When asked about it, the staff member admitted that they did not understand the internal communication about managing conflicts of interest and had not realised these actions were against company policy.” 

In the report the committee says personal and third-party conflicts of interest were among 3570 self-reported breaches in 2021. 

“Many of these breaches were the result of staff not being aware that their actions were an actual or perceived conflict of interest,” it says. 

“Staff must understand conflicts of interest and be aware of their obligations under the new code.” 

To achieve this, subscribers should review their policies and training programs, the committee says. 

“Conflicts of interest will occur from time to time. And while subscribers should avoid conflicts where possible, at a minimum it is important to manage conflicts appropriately when they arise. 

“Subscribers must be transparent about conflicts, manage decision-making processes and notify clients so the conflict does not affect outcomes.”