Insurance Brokers Code Review emphasises ethical negotiation

In short:

• Soft market conditions amplify brokers’ negotiating power and ethical risk.
• The updated Insurance Brokers Code of Practice places renewed emphasis on transparency, conflicts management and trust.
• Ethical negotiation protects not just insurer relationships, but client outcomes and the profession’s long-term credibility.

Negotiating from strength and scrutiny

Since the beginning of 2025, the hard insurance market has continued to soften.

As premium prices fall across many classes, brokers increasingly hold the upper hand in negotiations for client benefits such as broader coverage terms, reduced premiums, relaxed exclusions or enhanced service commitments.

In this environment, insurers under margin pressure may compete aggressively on price or speed to retain market share.

Brokers may test multiple underwriters simultaneously, leveraging competition to secure the best possible outcomes for clients. But as negotiating power shifts, so too does responsibility.

The recent Independent Review of the 2022 Insurance Brokers Code of Practice found that heightened competition and commercial pressure increases the risk of conduct that, intentionally or otherwise, undermines trust in the broking profession.

As the Review observed:

“Much has changed in a relatively short space of time, including expectations of consumer protection, business practices within the profession and mounting stakeholder skepticism. To maintain trust in a more testing environment will require more transparency and more ‘proof of trust’.

"The profession’s competitive advantage lies in resilient, ethical, trusted relationships and these must be demonstrably earned.”

The question for brokers is no longer simply how far they can negotiate but how they do so.

Pressure points in a soft insurance market

Over his 40 years in the insurance industry, Tony Lim, CEO of Acclaim Insurance Brokers in Singapore, has seen how pressure points emerge when markets soften. He observes that brokers scour the market for the cheapest capacity to retain clients.

Pressure to win and retain business intensifies. Higher workloads collide with shrinking margins. Non-price differentiators such as creativity and service become more important yet can further fuel competition.

“Essentially, there’s more work with less revenue,” says Lim. “This pressure can have the unfortunate effect of triggering unethical negotiation practices.”

The Code review reinforces the potential for this risk. It notes that aggressive competition can blur professional boundaries if transparency and conflicts are not actively managed, particularly when brokers are negotiating simultaneously with insurers while positioning themselves as trusted client advocates.

What do we mean by unethical negotiation?

Dr Tim Dean, philosopher in residence and Manos Chair in Ethics at The Ethics Centre, explains how negotiations can unravel ethically:

“Speaking generally, one or more of the parties might not be negotiating in good faith. They could be seeking to coerce, intimidate or deceive, rather than arrive at a mutually agreed position.

"Power will always play a role, but ethical negotiation requires that all parties are respectful and don’t use power to force the other party into a position they wouldn’t accept if the roles were reversed.”

Within insurance broking, Lim says unethical behaviour may include:

• withholding claims history or unfavourable underwriting information
• using strong-arm tactics to force unsustainably low pricing
• downplaying systemic claims trends
• overpromising premium savings or coverage outcomes
• winning business on low fees, then under-resourcing delivery

The Independent Code Review echoes these concerns, highlighting stakeholder unease about practices that may technically comply with disclosure rules but still erode confidence if not accompanied by genuine good-faith conduct.

The long-term cost of short-term wins

Unethical negotiation rarely ends at the placement stage. “If one person doesn’t believe another negotiator is acting in good faith, there’s a higher chance they’ll act in bad faith themselves,” says Dean.

“That can create a race to the bottom or push parties towards coercion or deception; ultimately inviting heavier regulation.”

Lim recalls a client who accepted a 60% premium reduction based on historical loss performance. When claims spiked, the insurer exited abruptly at renewal, leaving the client exposed and scrambling for replacement cover at double the original cost.

“That was a very expensive lesson,” says Lim. “Short-term savings can lead to long-term exposure.”

The Code review warns that these outcomes damage not just individual relationships, but confidence in the profession as a whole.

Brokers’ responsibilities under renewed scrutiny

Insurance brokers must continue to act in the best interests of clients but the Code review clarifies that this duty does not justify conduct that undermines transparency or sustainability.

“That includes safeguarding clients’ interests at all times, including disclosure of material facts that may not be in their favour,” says Lim. “It also means avoiding big pricing swings that create instability.”

At the same time, brokers have a professional obligation to provide insurers with complete, accurate underwriting information and to help clients understand their own responsibilities.

The Code review is clear: ethical negotiation is not passive compliance. It requires active judgement, honesty and restraint, particularly when brokers are negotiating from strength.

How to negotiate well without crossing ethical lines

Dean and Lim agree that ethical negotiation depends on clarity and mutual respect. “It’s wise to agree upfront on the standards and processes for negotiation,” says Dean.

“You must be prepared to compromise. Without compromise, negotiation breaks down and everyone may end up worse off.”

Lim adds: “Stay hungry but not desperate. A tripartite approach between broker, client and insurer allows all parties to make the journey together.”

In a soft market, ethical negotiation becomes a defining professional skill; not a constraint; but a differentiator.

NIBA’s response to the Code Review  

In its formal response to the Independent Review, Australia's National Insurance Brokers Association (NIBA) explicitly reinforced ethical negotiation as central to professional conduct, particularly where brokers hold increased market power.

NIBA supports strengthened provisions that directly affect negotiation behaviours, including:

• Expanded remuneration disclosure to all individual and small business clients, improving transparency around incentives.
• Consolidated conflicts-of-interest requirements, aligned with ASIC guidance, to ensure brokers identify, manage and where necessary, avoid conflicts.
• Explicit record-keeping obligations, reinforcing accountability for negotiation decisions and representations.
• Plain-English Code commitments, making expectations clearer for clients and brokers alike.

Importantly, NIBA emphasises that ethical negotiation is not about limiting competition but about ensuring competition operates fairly, sustainably and in the client’s long-term interest.

As NIBA notes, trust is the profession’s core asset. In a soft market, how brokers negotiate, not just what they achieve, will increasingly define that trust.

Explainer: Ethical negotiation: what the Code expects

As the Independent Review of the 2022 Insurance Brokers Code of Practice cautions, “the profession must accept that many of its practices are not always seen as consistent with its stated commitment to acting for the client.

To maintain confidence, the promotion of trust must be matched by transparency and conduct that clearly demonstrates client-first decision-making.”

Ethical negotiation matters most when brokers hold the greatest power as they do in a soft market. The Code Review makes clear that commercial pressure and competition heighten the need for disciplined, ethical conduct in broker negotiations.

Key principles of ethical negotiation under the Code include:

• Good-faith conduct: Brokers should negotiate honestly and respectfully, avoiding coercion, misrepresentation or tactics they would not accept if roles were reversed.
• Transparency of material information: Ethical negotiation requires full and accurate disclosure of claims history, risk trends and underwriting information; even where this reduces negotiating leverage.
• Responsible use of market power: Playing insurers off against one another may deliver short-term gains, but forcing unsustainable pricing or terms can expose clients to volatility and insurer withdrawal at renewal.
• Active management of conflicts: The Code Review places renewed emphasis on identifying, managing, and where necessary avoiding, conflicts that could improperly influence negotiation outcomes.
• Long-term client interest: Ethical negotiation prioritises stability and sustainability over headline premium reductions that may undermine future cover or claims support.

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