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Representation
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NIBA Member Representation: Year in Review
It’s been a busy year for NIBA’s policy and regulatory team. In addition to providing a number of submissions to the Australian Securities and Investments Commission (ASIC) on the Royal Commission reforms that came into effect this year, NIBA has also represented its members on a broad range of issues including building reform, workers’ compensation, emergency services funding, and cyber terrorism.
Western Australia Workers Compensation
NIBA provided feedback to WorkCover WA on the proposed Workers Compensation and Injury Management Bill 2021.
NIBA’s submission was heavily influenced by the technical expertise and advice provided by the WA Divisional Committee working group, which included brokers from across the WA broking community.
Following feedback, WorkCover WA will prepare a report for the Minister for Industrial Relations and finalise the Bill before it’s introduced to Parliament early in 2022.
New South Wales Building Reform
NIBA joined representatives from the building, insurance, emergency management, and government sectors at the Building Stronger Homes Roundtable. The roundtables – a joint initiative of the Master Builders Association (MBA) and the Insurance Council of Australia (ICA) – aimed to create a pathway towards national policies that improve property resilience.
The roundtable focused on issues surrounding building codes and standards, new property developments and land-use planning.
Australian Reinsurance Pool Corporation
NIBA provided a submission to Treasury’s triennial review for the design and operation of the Australian Reinsurance Pool Corporation (ARPC).
The review considered whether physical damage caused by a cyber-terrorist attack should be covered under the scheme.
NIBA’s submission highlighted that while the risk of such events occurring remains low, the rise of IoT makes attacks such as these increasingly attractive. In addition, the submission noted that while the number of connected devices has increased significantly over the past few years, levels of awareness and cyber security have not always kept pace.
The submission argued that it is unlikely that cover for physical cyberattacks would be able to be sourced from the commercial market and in NIBA’s view the scheme is best placed to facilitate this cover to the market.
NSW Emergency Services Levy
Continuing the campaign for the abolition of the Emergency Services Levy (ESL) on insurance premiums, NIBA met with the NSW Minister for Finance Damien Tudehope to discuss the levy, and its impact on insurance brokers who collect the levy on behalf of foreign insurers.
NIBA highlighted the significant financial burden and risk assigned to brokers when placing risks based in NSW with foreign insurers.
While NIBA remains committed to advocating for the abolition of ESL, it is hoped that these issues can be addressed while larger issues around the future of ESL remain unresolved.
Northern Australia Cyclone Reinsurance Pool
NIBA provided a submission to the Treasury Taskforce preparing recommendations to the Government in relation to the proposed cyclone reinsurance pool for northern Australia.
The submission stressed the importance of encouraging more insurers to participate in the Northern Australia insurance markets, particularly in far north Queensland.
The submission also urged the examination of options likely to achieve a material reduction in premiums payable by policyholders and property owners in northern Australia beyond the 10–15 per cent theorised by the introduction of the reinsurance pool.
NIBA provided a submission to the Treasury review of the Australian Financial Complaints Authority (AFCA). The submission highlighted the need for a more robust complaint triage system to consider the nature of the complaint, the parties against who the complaint should be directed (the broker, the insurer, or both), and whether the complaint has a factual basis.
This is important because the broking firm bears the cost of AFCA’s complaint, even when there is no real basis for the complaint against the broker. If the broking firm needs to take the matter to a decision stage, in order to obtain a fair result, the cost of the process is substantial and is often disproportionate to the amount in dispute.
AFCA Engagement Charter
NIBA’s submission supported the creation of an Engagement Charter to provide clarity to complainants and their representatives and financial firms as to their rights and obligations as members of AFCA, or as users of AFCA’s services.
NIBA noted that the charter repeatedly states that AFCA will follow principles of fairness when making its decisions. NIBA expressed concern that the inclusion of these terms without appropriate explanation of their meaning in this context could be misleading for complainants, as the concept of fairness is highly subjective.
Compensation Scheme of Last Resort
NIBA provided a submission to the Treasury consultation on the Compensation Scheme of Last Resort (CSLR).
NIBA has raised several concerns about the proposed scheme, including the expansion of the scheme to include financial services that were out of scope of the scheme recommended by both the Royal Commission and the Ramsey Review, despite a lack of evidence to suggest a significant problem of unpaid compensation exists.
NIBA argued that effective regulatory oversight combined with the new intervention powers granted to ASIC would significantly decrease demand for a CSLR.
The submission also highlighted that the proposed scheme did not adequately address the issue of moral hazard, with the current design providing an incentive to dishonest firms to use the scheme to underwrite poor governance practices or unethical conduct, safe in the knowledge that the scheme will ‘pick up the tab’.
SIRA Food Delivery Drivers
NIBA’s submission acknowledged that the Australian regulatory environment was ill prepared to handle the changes to the workforce brought on by the gig-economy.
NIBA noted that while some delivery platforms have their own injury insurance policies, the benefits available under these policies are significantly less than those available under the NSW workers’ compensation scheme.
Given the nature of their work, NIBA argued that food delivery riders met the requirements of a deemed worker, and as such, the existing scheme should be extended to include food delivery riders.
ASBFEO Amusement DMF Review
NIBA provided a submission to the Australian Small Business and Family Enterprise Ombudsman(ASBFEO) on the establishment of a Discretionary Mutual Fund for the amusement, recreation and leisure industries.
NIBA’s submission, while supportive of the measure, highlighted the need for rigorous vetting of members and a strong risk management framework to underpin the operation of the scheme.
NIBA also highlighted that both the insurance and reinsurance markets were experiencing a significant hardening which could affect the financial position of the scheme, given its reliance on reinsurance in the first few years of operation.
Tasmania Fire Services Act
NIBA provided a submission to the Tasmanian Government review of the Fire Services Act.
NIBA joined several other organisations, including the Property Council of Australia, in calling for the abolition of the Fire Services Levy that is currently levied on insurance premiums.
The submission argued that the levy was an inefficient funding model in that it both disproportionately affected one group over another and it disincentivised responsible risk-management behaviour.
ASIC Affordable Advice Project
NIBA provided a submission to ASIC in response to its work on promoting affordable advice.
NIBA’s submission stated that any discussion around promoting access to advice should also include access to risk advice.
The submission highlighted that financial advice takes many forms and that a onesize-fits-all approach would be unlikely to achieve a positive result.
NIBA supported ASIC’s view that the terminology used to describe different forms of advice is often vague and confusing, and encouraged ASIC to focus on how the terminology might be interpreted by clients and affect their expectations of the service they will receive.
Royal Commission Reforms
NIBA provided a number of submissions and technical advice to ASIC on a wide range of Royal Commission Reforms including: • Deferred sales model • IDR data reporting • Breach reporting guidelines • Claims handling • Design and distribution obligations.
NIBA would like to sincerely thank our members, divisional committees and directors for their invaluable feedback and technical expertise throughout the year.
We look to forward to continuing to represent our members and to tackling new issues in 2022.
CONTACT NIBA
As always, brokers who have questions about these or any other government or regulatory matters should feel free to contact NIBA CEO Philip Kewin at: pkewin@niba.com.au
