UNDERSTANDING THE IBCCC AND CODE COMPLIANCE

Insurance Adviser spoke with Oscar Shub, Chairperson of the Insurance Brokers Code Compliance Committee (IBCCC), who shared with us an overview of the vision and purpose of the Committee, as well as insights and advice on Code compliance.

The Role Of The Ibccc

The Committee’s role is to monitor the adherence of insurance brokers to the Insurance Brokers Code of Practice, which is aimed at delivering high quality service standards to consumers.

Our goal is to have a cooperative environment with brokers. While we are a monitoring body, we aim to monitor in a way that enhances the service provided by brokers and their standing in the community.

We see our role as providing guidance to the broking industry about how to comply with the Code and through the collection and analysis of the data, we seek to identify areas for improvement.

We also provide reports to NIBA and the public on the data and consolidated analysis around Code compliance which Subscribers can use to measure their performance against their peers.

We publish decisions made by the Committee in relation to breaches and where necessary, we advise ASIC on decisions we think are appropriate or where warranted by the behaviour of the Code Subscriber.

We’re not here to punish brokers - we’re here to help them improve.

We believe that by working with NIBA and the insurance broking industry, we can embed a better company culture which will lead to better insurance outcomes for consumers.

Room For Improvement

Based on our current data around self-reported complaints and breaches (which is based on the old Code) we’ve seen that very often breaches were resolved by providing the service requested or an apology. Most complaints were resolved quite quickly and there are very few that proceed to full investigation.

Around 41 per cent of breaches reported in 2021 were due to manual error and about 32 per cent were staff not following correct processes and procedures. These statistics show that there is a clear opportunity for improvement through educating and training staff and reducing manual processes, where possible.

One concerning trend that we have seen is the continued under-reporting of breaches and complaints.

From the data that we have, just under half of Code subscribers reported no breaches in 2021, and just over half (55 per cent) reported zero complaints.

This is concerning as there were a number of Code Subscribers, including companies with more than 100 full-time

BY OSCAR SHUB Chairperson, IBCCC

staff members who reported no breaches or complaints in 2021.

That’s not a good record to have.

We do think that the new Code will help with this. It is more specifically worded compared to the old Code, and very clear and precise about when subscribers need to report a breach or complaint. By the end of the first quarter of 2023, we should start to see trends around how brokers are complying with the new Code.

The other good news is that we are already seeing some improvement in breach reporting with the introduction of the detailed breach data report, which asks

IMPROVING BROKING PRACTICES THROUGH BREACH REPORTING CASE STUDY: BREACH IDENTIFIED THROUGH INTERNAL AUDIT

INCIDENT

Through an internal audit, an insurance broker was able to identify multiple breaches of the Code caused by the same staff member.

The staff member failed to obtain policy renewals for multiple clients, despite the insurer advising them that cover would not be renewed.

Breach Remediation

While the insurance broker was reviewing its staff member’s conduct, it conducted an audit of all staff files.

It was able to immediately obtain policy renewals for all the affected clients.

The staff member was given training and their files were reviewed by a senior broker.

The insurance broker considered this to be a systemic issue because multiple client files were affected.

OUTLINE OF THE STEPS INVOLVED

1 Through an internal audit, the insurance broker identified a breach of the Code.

2

It identified the root cause of the breach, whether any clients were affected and the potential financial impact.

3

It undertook short-term remediation (it contacted all affected clients, and it rectified errors by arranging insurance cover).

4

It undertook long-term remediation (it reviewed its training, it undertook file audits).

5 subscribers to provide detailed information on every breach.

The insurance broker then reported the breach in its breach register.

We have been seeing this trend under the old Code, and we expect to see an even greater improvement in breach data over the next 12 months with the new Code now in effect.

Notifying The Committee

There was an interesting question put to me at the NIBA Convention in early 2022, where a broker asked if they still had to notify us about a complaint or breach, if they had already sorted it out.

My answer was very simply yes. Just because an issue gets resolved doesn’t mean it shouldn’t be reported.

What the Committee wants is data on breaches. The fact that it is resolved is great, but we want to know what it was and why it occurred so we can use this information to educate other brokers and prevent similar breaches from occurring elsewhere.

We recognise that breach reporting is a concern for brokers, and that brokers may be reticent about notifying us. It’s important to remember that breach reporting is not about getting a bad name – it’s about recognising that something has gone wrong and that it may also be going wrong elsewhere.

Ultimately, what we are looking for is for brokers to work with the Committee and the Code to help change the view that the community may have about broking services.

Advice On Code Compliance

What’s important is not to sit there and worry. If a question arises in your head, get up and talk to someone about it.

The Code team is the first port of call if you have questions – they can clarify what sounds like a breach or complaint and will advise if it needs to be reported. There are also a lot of organisations that are running education seminars and teaching brokers about the new Code.

The moment you think there may be a problem, deal with it. Don’t wait for it to become a problem.

Putting It On The Record

I believe that the best way for brokers to avoid problems under the Code is to ensure

CASE STUDY: BREACH IDENTIFIED THROUGH CLIENT QUERY OR COMPLAINT

Incident

A client’s house was damaged by fire. At the time, the client held a comprehensive home and contents policy that they believed covered damage and/or loss as a result of a fire.

The client’s claim was denied by the insurer on the grounds that the policy excluded fire damage. Surprised by this, the client lodged a complaint with their insurance broker as they were certain that they had given instructions to their broker to make sure the policy included fire damage.

The client’s file did not contain any record of these instructions. The insurance broker resolved the complaint by paying out the client’s claim and the complaint was closed.

Breach Identification

When looking into the complaint, the insurance broker found that the root cause of the breach was human error – the staff member did not write a file note about the instructions from their client.

Following this, the insurance broker reviewed its processes, procedures and training. It made a change that required all staff members to enter file notes after every client interaction.

The insurance broker reviewed this after six months, and conducted a there is good record-keeping, which is essential to inform clients and brokers about what has happened. random file audit, to ensure all client files included relevant file notes.

We would encourage brokers to ensure they receive responses in writing. In cases where a client cannot or does not respond in writing, we think it would be valuable for the broker to put something in writing, whether it’s an email or letter to confirm what was agreed with the client.

OUTLINE OF THE STEPS INVOLVED:

1 A client lodged a complaint.

2 The complaint was resolved by the insurance broker.

3 The complaint was closed and recorded in the complaints register.

4 The insurance broker reviewed the matter to see if it also constituted a breach of the Code.

5 It identified the root cause of the breach, whether any clients were affected and the potential financial impact.

6 It undertook short-term remediation (it amended procedures, it conducted staff training).

7 It undertook long-term remediation (it reviewed the procedures to check whether they were effective and it conducted file audits).

8 The insurance broker then reported the breach in its breach register.

The record should also be transparent and efficient, so that anyone that picks up the file can make sense out of the records kept.

Modern technology now enables everybody, regardless of the size of organisation, to have an effective framework in place for record-keeping. This should no longer be a concern for any brokers, and no one should be having conversations without a record of what was discussed.

The Committee is focused on avoiding disputes and having a record of transparent communication between the broker and the client, which will prevent a lot of issues from arising.