Stepping forward

Stepping forward

Incoming NIBA chief Philip Kewin is taking up the reins as brokers enter a period that will define their futures

By Wendy Pugh

Gears are changing at the National Insurance Brokers Association (NIBA) as two priorities critical for the future of general insurance advice dominate the agenda for the next year, with a new chief executive stepping in.

Philip Kewin, who previously led the Association of Financial Advisers (AFA), is taking over from Dallas Booth as NIBA gets set to deliver a long-awaited update to the brokers’ code of practice and to deal with the Federal Government’s review of broker commissions.

Mr Kewin has more than 35 years’ experience in financial services, mainly in life insurance and financial advice. He has worked at Mercantile Mutual, owned a financial advisory business, and held roles at Zurich including general manager retail life and investments.

He says brokers are well placed to set standards in a practical and pragmatic way and to demonstrate the value they deliver over the next year. That’s close to the position financial advisers found themselves in a few years ago when laws were imposed after self-regulation in the sector was deemed to have failed.

“I think that is one of the most significant differences,” he tells Insurance News. “We do have an opportunity, as an industry, as a profession, to set those standards ourselves and to, where possible, take control of our own destiny.”

Mr Kewin emphasises the values of integrity and honesty, and says he will take an open-minded and collaborative approach on coming aboard at NIBA.

Underlining expertise: new NIBA chief Philip Kewin

“I believe we work best when supporting each other and approaching things objectively,” he said. “That said, if there is something that is worth fighting for on behalf of brokers, I won’t take a backward step.”

Mr Kewin takes up the reins on November 1 following a handover period with Mr Booth, who has held the position for the past decade and who will remain connected with broking through ongoing involvement in the insurance sector.

Mr Booth’s time at NIBA has been dominated by the need to put the brokers’ case to numerous government and regulatory reviews that have swept up the general insurance intermediary business – none of which uncovered serious problems.

Most recently NIBA has been busy with outcomes from the Hayne royal commission, although again the inquiry didn’t uncover any poor consumer outcomes from brokers. A resulting flood of regulation took effect from October 5, following some delays caused by the COVID-19 pandemic.

The regulatory action slowed progress updating the 2014 version of NIBA’s code of practice after a review which started in 2018, while developments elsewhere such as completion of the Insurance Council of Australia’s (ICA) code revamp have been monitored and taken into account.

The Insurance Brokers Code Compliance Committee annual review last year criticised the delays and a lack of transparency in the code’s development, warning of a “serious erosion of consumer confidence” in NIBA and the industry.

The association is conscious of time passing, but Mr Booth says the document can only be released when the consultations and final processes are completed.

“It has taken longer than we had hoped it would take, but this is important work and it is going to be an important statement of commitment to professionalism and integrity in insurance broking,” he says.

The new version was due to be released at the NIBA Convention this month, but that event has been pushed back to February due to COVID-19 restrictions and a new launch date is being finalised.

Despite background environment changes, which include developments in the way codes reflect community and stakeholder expectations, Mr Booth says the existing 2014 version provides a strong base from which to build.

“It is still, I would argue, easily the best broking code in the world,” Mr Booth says. “It is a big statement, but I am prepared to have a debate with anybody about that.”

He says that while cases of poor behaviour can emerge, and are addressed, systemic issues are not an issue, the broking culture is overwhelmingly positive and members are committed to working in the interests of clients.

“I hear them talking about it when you go to the pub, and when you are having a glass of wine at an industry function. That is what brokers talk about – how to look after clients. That is the culture of insurance broking in Australia.”

Mr Kewin says the new code should be a document members feel they own, that is empowering, and that allows them to be proactive in taking control of their own futures and in ensuring high standards.

“We can’t afford to be complacent, and that is why we need to set down a code and establish ourselves as the trusted advisers in the community,” he says.

“It sets in place the values and the practices that we see would give government, regulators and consumers the confidence that we are capable of self-regulating, as opposed to having additional regulations thrust upon us.”

The upcoming government financial services advice and remuneration review will also require the group to be proactive in taking on regulatory and consumer concerns.

Commissioner Kenneth Hayne recommended a review of measures to improve the quality of financial advice in the planning sector by June 30 next year, but no later than the end of 2022. Another recommendation added that the review should examine whether a general insurance exemption to the ban on conflicted remuneration remains justified.

Financial Services Minister Jane Hume has since said that a separate planned review of the Life Insurance Framework, which caps commissions paid to advisers, will be rolled in as well.

Treasury will conduct the process, but there’s a likelihood progress will be disrupted as a result a federal election due by May, pushing outcomes into the second half of next year.

Mr Booth says the royal commission did not hear evidence of poor client outcomes driven by badly designed remuneration structures in broking, but took the opportunity to revisit the exemption.

“The point I want to emphasise is that the royal commissioner did not recommend the banning of general insurance commissions. He simply said, the question should be asked: ‘is the carve-out for general insurance still valid?’.”

Nevertheless, since the Hayne inquiry the Australian Competition and Consumer Commission (ACCC) and the Australian Small Business and Family Enterprise Ombudsman have recommended in separate inquiry reports the banning of broker “conflicted remuneration”.

Mr Booth says neither report identifies serious issues in terms of broker remuneration producing adverse outcomes, and they fail to demonstrate what would happen if commissions were abolished, and what if any benefits would really be achieved.

“Neither the small business ombudsman’s report or the ACCC report did, and we can argue – and I think we will argue to the remuneration review – that if you change this there is a really good chance the community will be worse off,” he says.

Conversely, a review of SME insurance affordability and availability undertaken by John Trowbridge for ICA finds commissions should continue, but with improved transparency and disclosure.

Still involved: outgoing chief executive Dallas Booth

NIBA has commissioned and released a Deloitte Access Economics report on the economic value of insurance broking to support its arguments. Mr Kewin says it’s important to liaise with politicians before they participate in policy discussions, to ensure they appreciate the value of brokers to consumers, the economy and society.

“I think we have done a good job of communicating that, but that is where we are going to be asking our members to play a bigger role in actually building a relationship with their local MPs and senators so they can actually understand the role of brokers, and the value, a lot better,” he says.

“It is going to be extremely important that it’s understood what brokers do, how they do it, how they are remunerated and how that remuneration structure actually works for the client.”

The risk otherwise is that issues are debated in party rooms by decision-makers with little understanding of brokers and no relationships to tap into that offer direct experience and information on the subject.

Insurers have also gone on the front foot amid calls for more government action on affordability and availability, with the Trowbridge report making 13 recommendations, including closer collaborative processes to assist industry sectors with solutions.

ICA is establishing a “Business Advisory Council” that will be chaired by Mr Booth and have representation from groups such as the Australian Chamber of Commerce and Industry. NIBA and the Underwriting Agencies Council will participate as required while also separately working with ICA on issues.

“I think there is a really important role, and an opportunity, for NIBA and its members to support the process, and certainly also a tremendous opportunity for the Insurance Council through this business advisory group, with the support of insurers, to try and address some of the core issues of risk and insurance that are in the community at the moment and see where we can come up with some really good solutions,” Mr Booth says.

Over coming months NIBA will monitor the operation of the October 5 reforms which aim to boost buyer protections, and will keep a close watch for any unintended consequences.

Preparations have been made more difficult by the last-minute release of some regulatory guidance, but the Australian Securities and Investments Commission has said it will take a “reasonable approach” and take account of “best efforts”.

The brokers’ peak body also has an eye to the big picture in looking ahead, holding a webinar on outcomes from the Future of Broking in 2025 strategic project that focuses on how businesses can remain viable and strong into the future.

Objectives include increasing levels of professionalism and enhancing brokers’ positions as trusted risk advisers to clients. The strategy highlights their role as partners to underwriters and capital providers and as advisers to government on insurance and risks facing communities.

Mr Kewin says the future lies in the relationship and technical expertise side of broking and advice, with technology increasingly taking over more transactional tasks and processes.

“That is one of the key things that we are trying to communicate,” he says. “Any value you are placing on transactions that are replaceable by technology, you need to be very wary of, because that is not necessarily where your value is.

“The value is in communication with clients, in understanding their needs, and helping them navigate through the process if there is a claim. They are the important things, but anything that can be replaced by technology – if that is where you place your value – then that is a threat to your business.”

Mr Kewin is still getting to know the broking sector at an in-depth level, but says there is a different dynamic compared to financial advice, and a collegiate environment. Pandemic restrictions and virtual meetings have everyone looking forward to getting together in person and as a community, with challenges across the industry to be addressed.

“The more that we are able to work together collectively the better outcomes there will be from an insurer’s perspective, from a broker’s perspective,” he says.

“I think that is critical, and that is one of the things that I have observed. There seems to be a very strong appetite to work together to get better outcomes.”