Insurance brokers ‘buck the trend’

Insurance brokers are not the problem, say the regulators and FOS Lead Ombudsman – General Insurance John Price had the evidence in his presentation at the NIBA Convention in Sydney on Tuesday.

In fact, in 2016/2017, FOS received nearly 40,000 disputes, and closed 39,471 disputes – “a record number of disputes for FOS”, Price said. The number of disputes had increase by about 11 to 12 per cent. But: “What is pleasing for brokers – the bouquet again – is that only 216 disputes was received against brokers, down 37 per cent on the previous year – totally bucked the trend.”

Price went on to note that nearly 18,000 of the disputes were resolved in the first stages of the dispute resolution process; some 22,475 disputes were resolved at the second stage. This, he noted, was up 11 per cent on the previous year.

In 2016/2017, FOS accepted 8,756 general insurance disputes out of around 13,000 it received, Price said. This was up 28 per cent on the previous year which was already an increase of 20 per cent on the year before – “a significant increase”, he pointed out.

Looking at general insurance disputes, Price said there wasn’t a single identifiable issue with claims but noted that “outsourcing” of disputes popped up as one – “not only with claims handling, but compliance with determinations”.

Price commented that it was “surprising” that it took nearly 12 months for internal dispute resolution (IDR) figures to increase and reached 31,000 for the year, though FOS did not see much of that in the broker area again.

He noted: “55 per cent of broker disputes were resolved by the broker which, from our point of view, is excellent. Only 37 disputes in the broker space went to decision – 22 were in favour of the broker and 15 in favour of the applicant. It just shows you that brokers are not really on our radar as a prob area.”

Typical claims against brokers tended to be around claims being declined, the policy not covering what the person requested be covered, lack of documentation on the extent of the cover etc. “I think it is important to re-emphasise it is … the culture … that is so important.

“Brokers have a duty of care to act in a professional manner – that of a competent and experienced broker. I have heard comments that the broker did not have a lot of experience in the area to justify a sale of an inappropriate product. That is not how it works. As soon as you sell that product, you are expected to act in a manner of a competent and experienced broker. You can’t pass on the responsibility to the third party, the insurer and claim that it is their fault that the policy doesn’t cover what you expect it to cover.… that’s not how this works.”