Financial Services Minister backs role of brokers

Financial Services Minister Stephen Jones has backed the importance of brokers in building resilience and, against the backdrop of the Quality of Advice review, has said he has not seen a problem relating to their role that needs to be fixed.

Mr Jones told the National Insurance Brokers Association (NIBA) summit yesterday that he would not be “running a commentary” or “getting in the way” of the advice inquiry or recommendations that may be put by reviewer Michelle Levy to the Government.

He also said, in the context of insurance broking, that he hasn’t seen a “problem that I have to go and fix” and the Government will ensure it will speak with the sector should it see issues.

“I am not yet appraised of any problem that needs to be fixed,” he added in response to a question regarding potential conflicts following his speech in Sydney yesterday.

Mr Jones told the summit that conflicts exist across commercial activity but a key issue is the primacy that is given at critical times.

“For a broker who is engaged by a customer, primacy should be given to the interests of the customer over the underwriter at the point in time when it matters,” he said.

Mr Jones told the summit that rising insurance costs reflected past failures of governments globally to address the costs of climate change, and escalating risks have led to some calls for premiums to be subsidised.

“As a matter of principle, I don’t support that,” he said. “As a responsible government we advocate dealing with the risk side of the equation rather than attempting to mask the price of that risk.”

Mr Jones highlighted the Government’s commitment to boost resilience funding to at least $200 million a year and said more needed to be done in consultation with all levels of governments, developers and the community to provide long-term solutions and to not rebuild in the same way after disasters.

“We now know that is not sustainable,” he said. “It is a far more responsible response to the known problem to say ‘let’s have a look at the risk side of the equation’, and that is what we are doing.”

Mr Jones said brokers played “an important role in this equation” and in ensuring policyholders get the best deal possible in covering required risks.

Earlier NIBA President Dianne Phelan told the conference that the percentage of insurance business written in Australia through a broker had risen to 51% as the sector continued to expand its footprint.

“The fact that the amount of business that is being written through broker channels is increasing and continues to increase…is instructive,” Mr Jones said.