Vol: 45 Issue: 2 | July 2022
Veteran insurance professional Nick Cook’s pride in how the industry has helped customers and minimised complaints during COVID-19 is tempered by one warning — he thinks an even bigger test is around the corner.
Cook, executive general manager — partner, broker services & agencies at Steadfast, notes that the Own Motion Inquiry report from the Insurance Brokers Code Compliance Committee (IBCCC) has praised brokers for how they responded to bushfires and the pandemic in 2020. The findings, released in April 2022, suggest brokers often went ‘above and beyond’ to get good outcomes for clients.
However, Cook fears the devastating recent east coast floods and related supply chain issues will create a ‘perfect storm’ of housing and property losses, insurance claims, tradie shortages, building cost blowouts and potential knock-on impacts for underinsurance that will inevitably lead to challenges for insurers and brokers.
‘I honestly expect that these weather events will lead to more complaints — it’s just the nature of the losses occurring,’ he says.
This reality makes it more imperative than ever for brokers to have strong complaints-handling and self-reporting systems as Australia prepares for a new Insurance Brokers Code of Practice, which will take effect in November 2022.
Compliance in focus
In late 2021, the IBCCC released its Annual Report 2020-21 and a companion Annual Data Report that highlight potential concerns about how some brokers manage complaints.
The reports show that while breaches and complaints under the Code have risen year on year, the percentage of Code subscribers self-reporting such breaches has dropped significantly.
There were 3,328 self-reported Code breaches in 2020, up from 2,006 the previous year. However, just 44 per cent of Code subscribers self-reported breaches in 2020, down from 51 per cent in 2019.
With more than half of all Code subscribers not self-reporting any breaches during the reporting period, Clyde & Co legal consultant and IBCCC chair Oscar Shub says the issue ‘will remain an area of focus going forward to ensure all breaches are captured and reported’.
He points out that an influx of Steadfast brokers into the Code community in December 2019 has resulted in those new members familiarising themselves with the requirements of the monitoring and reporting process. ‘It’s a learning process,’ says Shub. ‘I am quite confident that data will rise when more education and guidance is put in place.’
In general, Shub says brokers are managing complaints ‘reasonably well’, with very few reaching the Australian Financial Complaints Authority (AFCA) Ombudsman.
For those seeking best practice, he advises having accessible and visible internal dispute resolution information for brokers, as well as clear, written procedures for responding to disputes.
‘And, it is important that brokers maintain training programs to ensure staff are aware of complaints-handling responsibilities,’ says Shub, adding that this will be a priority area when the new Code is implemented.
A learning opportunity
The starting point for better complaints handling, according to Shaun Standfield, managing director of Insurance Advisernet Australia & New Zealand, is to change the mindset around claims disputes. ‘I think “complaints” is the wrong word,’ he says. ‘We should see complaints as opportunities.’
Standfield says a complaint should have two flow-on effects. First, it gives firms a chance to assess if individual files, brokers or issues need remediation. Second, if systemic and repeat issues are identified across a number of practices, it ‘becomes a training opportunity and a learning opportunity for the organisation’.
He wants his brokers to openly report any disputes, rather than work in a ‘risk-averse culture where people don’t make complaints because they think they’re going to get into trouble’.
‘We actually want those complaints coming forward so we can learn from them, at an individual level and also at a systemic level across the organisation.’
AFCA’s 2020-21 Annual Review states that of 16,912 general insurance complaints lodged, just 309 were against brokers. However, there is no room for complacency according to Karenne Hill, Insurance Advisernet’s general manager, risk, compliance & HR.
To reduce the number of complaints and any fallout from them, she suggests pursuing the right policies from the outset; showing empathy for clients; advocating for them; communicating clearly; responding quickly to disputes; being open and fair; and listening to consumers to understand their frustrations.
‘We encourage our brokers to report complaints quickly, so they don’t escalate,’ says Hill. Roger Abel, managing director of Rothbury Insurance Brokers in New Zealand, agrees that complaints can and should be appreciated ‘as the most important client feedback we can receive’ and treated as a chance for learning.
To help mitigate complaints, Rothbury brokers are required to adhere to a comprehensive complaints-management policy to ensure issues are actively managed and resolved, while clients are sent a complaints guide providing clarity around how a complaint will be managed.
Abel says this process, as well as identifying dissatisfied clients early and capturing information about their issue, strengthens Rothbury’s self-reporting culture.
He also advocates:
- Speed: simple things are addressed immediately, and complex issues are escalated to specialist or senior management quickly.
- Client focus: understanding and prioritising the best-possible outcome for the client.
- Fairness: a healthy, long-term relationship must involve fair outcomes, even when expectations are not met.
For Steadfast, a review of processes within its vast broker network led to the launch of its Gold Seal CCX360 cloud-based compliance-management platform that allows its brokers to triage complaints and breaches and better deal with their regulatory reporting requirements. It captures complaints data for reporting purposes and shares it with insurers, too.
The last piece of the jigsaw is having a dedicated customer advocacy manager. ‘If a customer feels they may have an issue with a Steadfast broker, we have our customer advocacy manager for the customer to reach out to,’ says Cook.
New Zealand adopted the Fair Insurance Code in 2020, which was developed by the Insurance Council of NZ to apply to insurers. Brokers are instead subject to the Insurance Brokers Association of New Zealand (IBANZ) Code of Professional Conduct as they advocate on clients’ behalf.
Abel says the impact of the IBANZ Code has been minimal on Rothbury in terms of advocacy for clients, because many of the standards outlined are already embedded in the company’s values and processes, including the complaints-management policy and client complaint guide.
These cover factors such as being fair when considering client complaints; responding within prescribed timeframes; keeping a record of all correspondence, meetings, conversations and findings; keeping the client informed of progress; forwarding the complaint to the appropriate level of authority for resolution; and ensuring the resolutions are consistent with company policy and company values.
However, Abel says the Code helps in that it sets out insurer and client obligations in a clear, structured and user-friendly manner. In Australia, Cook believes the revamped Insurance Brokers Code of Practice will place greater emphasis on:
- higher standards above those required by law
- obligations to report brokers who breach the Code
- increased remuneration disclosure requirements
- obligations to identify and support vulnerable customers such as the aged, those with a disability, or people who are in financial distress.
Hill says one of the key new measures is that brokers should seek to ensure that complaints are resolved to the satisfaction of the complainant within five days.
‘We’ve always worked to get complaints resolved as quickly as possible anyway, so for us, it probably just requires a little bit of a refinement while holding true to what we’ve always held as best-practice standards,’ he says.
Shub notes that the Australian Code introduces the power to sanction brokers who do not comply with their obligations. However, he says the IBCCC’s overarching goal is to monitor the Code and broker behaviour and ‘instil a culture of compliance’.
‘It’s important to understand that complaints-handling obligations need to be met by the largest, most well-resourced brokers, down to the small, single-person operations,’ he says
Cook urges brokers to embrace the new Australian Code as a foundation of their future planning.
‘Brokers should continue to build a culture where it’s OK to have complaints, knowing that having complaints and reporting them ultimately leads to better outcomes for the broker’s customers.’
Shub says the IBCCC’s aim is to ensure that brokers continue to provide a strong level of service to the community. Stressing that it will not be a ‘policing body’, he says the plan is to work co-operatively with all involved brokers and institutions.
‘We want to create a culture of avoiding breaches and complaints, rather than one of accepting complaints and then needing to deal with them,’ he says.