AFCA’s David Locke calls on brokers to boost trust and tackle industry hurdles
AFCA’s David Locke calls on brokers to boost trust and tackle industry hurdles | Insurance Business Australia
Insurance News
AFCA’s David Locke calls on brokers to boost trust and tackle industry hurdles
Evolving responsibilities of brokers highlighted
Insurance News
By
Roxanne Libatique
David Locke, chief ombudsman of the Australian Financial Complaints Authority (AFCA), addressed the National Insurance Brokers Association (NIBA) Convention on Oct. 21, focusing on the evolving responsibilities of brokers and current industry challenges.
Locke (pictured) pointed out that the role of brokers has expanded beyond traditional insurance services, now encompassing claims management, loss control, and due diligence audits.
“Brokers are a vital link in the chain between insurers and policyholders, responsible for placing just over half of the total insurance business each year,” he said.
He acknowledged that rising insurance costs are leading many to reduce coverage or forgo it entirely, further stressing brokers’ role in ensuring clients secure appropriate coverage amidst these pressures.
While brokers represent a small proportion of AFCA complaints – 584 out of more than 104,000 received last financial year – Locke urged vigilance, particularly concerning delays in claims handling.
“While [brokers] do not have the same volume of complaints as general insurance, which have increased by 81% since AFCA’s inception, it would be a mistake to be complacent, and we do see some common themes from the complaints that we do receive,” Locke said.
He encouraged brokers to take a customer-focused approach, regularly updating clients about the status of claims, especially when delays are inevitable.
Insurance brokers’ service issues
Locke also raised the issue of the standard of service provided by brokers in managing claims. He stressed that brokers are expected to act in the best interests of their clients, advocating for policy benefits rather than simply mediating between the insurer and the client.
“A key aspect of [brokers’] service is acting in [their] clients’ best interests by checking to make sure a policy still meets their needs, rather than simply renewing it each year,” he said.
He referenced the ABC’s recent investigative program, “The Strata Trap,” which exposed conflicts of interest within the strata insurance sector, involving brokers, strata managers, and insurers. He warned that such issues could tarnish the broader reputation of the insurance broking industry.
“The potential damage to the reputations of every person in the room is real because of the actions of a few,” Locke said, calling on brokers to rebuild trust.
Transparency in insurance broking profession
Transparency regarding remuneration and conflicts of interest was another key theme Locke addressed.
He urged the industry to embrace transparency in the ongoing review of its code, particularly in light of increased scrutiny from both the public and regulators.
AFCA’s role, Locke said, includes supporting industry codes of practice and promoting standards that go beyond mere legal compliance, setting a higher benchmark for professionalism and ethical conduct.
AFCA has seen a sharp rise in scam-related complaints, and Locke noted that the organisation is working with stakeholders to improve scam prevention efforts nationwide.
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