On 7 October 2012, National Insurance Brokers Australia
(NIBA) announced a revised Insurance Brokers Code
of Practice (the Code) which deals with 12 new Key
Code Standards addressing the issues that NIBA believes regulators
are likely to focus on in the future, including the new statutory
best interest duty for retail and wholesale business
The Code, first introduced by NIBA in 2006, sets standards of
customer service for subscribing brokers in relation to their
interactions with individual and small business clients with a view
to increasing transparency, efficiency and consumer confidence in
the insurance broking industry.
The Code applies to general insurance and life insurance
services and includes claims administration, loss control and risk
management advice, mutual fund or captive administration, risk
inspection and premium funding arrangement or referral. Reinsurance
is expressly excluded from its application.
The Code is administered by the Financial Ombudsman Service
(FOS) which monitors the Code for compliance by
its members and also handles consumer disputes with insurance
brokers. There is also an independent Code Compliance Committee
that oversees its administration. Code subscription is not
compulsory, although all NIBA members are automatically bound by
the Code and non-NIBA members can elect to subscribe to it.
The reformulation of the Code is the result of a two-month
consultation commissioned by NIBA with key stakeholders including
NIBA members, consumer representatives, regulators, FOS and the
Federal Government. According to the resultant report produced by
Professional Financial Solutions the main issue raised in these
consultations was an overall lack of awareness about the Code in
terms of its existence, operation and impact, at both client and
broker level. It is therefore unsurprising that the new formulation
of the Code focuses on efforts to promote the Code and its
benefits, by clarifying matters such as Code objectives, how to
navigate the Code and to whom the Code applies.
The new 12 Key Code Standards are:
We will comply with all relevant law.
We will transparently manage any conflicts of interest that may
We will clearly tell you if we do not act for you in providing
our covered services.
We will clearly tell you about the scope of our services.
We will discharge our duties diligently, fairly and with
honesty and integrity.
We will clearly tell you before providing our services how they
are paid for and answer any questions about our remuneration.
We will handle any money received in accordance with relevant
law and any agreement with you.
We will ensure that we and our representatives are competent
and adequately trained to provide the relevant services and will
maintain that competence.
We will respond to catastrophes and disasters in a timely
professional, practical and compassionate manner in conjunction
with any industry-wide response.
We will ensure that we have an internal complaints handling
process for covered service that meets the Code complaints and
dispute process standards.
We will promote the Code.
We will not engage in activity or inactivity which is
reasonably likely to bring the insurance broking profession into
The Code will take effect from 1 January 2014, with NIBA
focusing current efforts on promoting the Code and training members
in its operation. These initiatives also provide non-subscribing
brokers with the opportunity to learn more about the Code and how
they can benefit from its operation. The Australian Government has
welcomed the regime generally as an effective tool for
self-regulation of the broking industry and commended NIBA for its
efforts in further improving the service to customers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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