Lack of Confidence in Industry Codes Raises Questions About Professionalism Over Commercial Interest

The Australian Consumers Insurance Lobby (ACIL) says confidence in industry-led codes of conduct across the insurance sector is being eroded by a growing perception that commercial interests are being prioritised over professional standards.

ACIL’s concerns extend to both the Insurance Brokers Code of Practice and the General Insurance Code of Conduct, each of which is currently subject to review or reform processes overseen by industry bodies whose boards are dominated by industry participants and lack meaningful independent representation. Where governance structures are stacked with commercial interests directly affected by the standards being set, confidence in the objectivity of those processes is inevitably weakened.

At the heart of the issue is a simple but fundamental question: how can industry bodies credibly be expected to set and enforce professional standards when those standards directly affect the commercial outcomes of the businesses represented at the board table?

“This is not an allegation of misconduct, nor a criticism of individuals,” said Tyrone Shandiman, Chairperson of ACIL. “It is about confidence. Professional codes only work where the community can be confident that professionalism, not commercial convenience, is driving the standards being set.”

In other professions and regulated sectors, industry bodies have recognised that credible self-regulation depends on clear separation between professional standard-setting and commercial interest, achieved through genuinely independent board representation. Professional associations and regulatory boards in areas such as accounting, mortgage and finance broking, healthcare and agriculture have embedded independent directors within their governance frameworks to ensure balance, objectivity and public confidence in the standards they set.

Both the Insurance Brokers Code of Practice and the General Insurance Code of Conduct review processes involve the engagement of independent reviewers to assess the effectiveness of the codes and their governance arrangements. However, where the findings and recommendations of those independent reviews are subsequently narrowed, deferred or selectively adopted by industry-led boards, confidence in the integrity of the process is inevitably undermined. 

“Independent reviews are meant to inform reform, not simply validate existing positions,” Mr Shandiman said. “When industry commissions independent scrutiny but then retains broad discretion to set aside uncomfortable recommendations, it raises legitimate questions about whether professionalism or commercial interest is ultimately driving the outcome.”

ACIL notes that this challenge is not unique to insurance. Other sectors, including superannuation and financial services, have faced similar confidence issues where industry-dominated governance structures struggled to deliver reforms recommended through independent review.

“Time and again, we see the same pattern,” Mr Shandiman said. “Without sufficient independence, hard questions about professionalism are deferred, diluted or avoided altogether.”

Without greater separation between professional standard-setting and commercial interest, ACIL warns that reliance on industry codes will continue to decline.

ACIL Warns NIBA: Failing to Lead Reform Invites Regulatory Intervention

The Australian Consumers Insurance Lobby (ACIL) has warned that the Independent Review of the Insurance Brokers Code of Practice and NIBA’s response exposes the structural limits of self-regulation, reinforcing perceptions that regulators, rather than industry codes are now the primary means by which consumers can be protected from conflicted and opaque insurance broking practices.

The Independent Review makes it abundantly clear that the sector is divided. On one side are those calling for reform — a Code that is client-focused, transparent, modern and capable of managing real conflicts of interest. On the other are those clinging to the status quo, insisting that existing laws are enough, that brokers always act in clients’ interests and that no meaningful change is required.

Most concerning is NIBA’s repeated reliance on the argument that the Code of Practice need only reflect existing legal obligations. In doing so, NIBA points to the Corporations Act (such as Regulatory Guide 181) as already providing comprehensive requirements in areas such as conflicts management and the provision of advice.  That position fundamentally misunderstands the purpose of self-regulation.

“A Code of Practice is not meant to be a cut-and-paste summary of the Corporations Act. Self-governance exists to lift standards above the legal minimum, to address emerging risks and to prohibit practices that may be legal but are plainly unacceptable.  By failing to do this, NIBA undermines the case for self-regulation and instead invites regulatory intervention.” Mr Shandiman said.

The Review itself documents serious and persistent concerns about insurance broking practices — particularly in strata insurance, the industry’s longstanding Achilles’ heel — including entrenched conflicts of interest, opaque remuneration arrangements and governance failures that have attracted sustained media, regulatory and consumer scrutiny.

“One clear example we raised in our submission was the need for the Code to expressly prohibit brokers from paying referral fees or other benefits to people who owe a fiduciary duty to the client, such as strata managers. ASIC Regulatory Guide 181 doesn’t spell this out, but that’s not the point. This isn’t about regulatory silence — it’s about professional responsibility. If it’s unlawful for a fiduciary to receive a payment, then it is clearly not right or fair for a broker to facilitate or be complicit in that arrangement, regardless of whether a regulatory guide explicitly says so. NIBA has an opportunity to lead here by making it clear in the Code that brokers should not engage in practices that rely on or enable conduct that undermines a client’s fiduciary protections, rather than leaving these issues for regulators to clean up later.”

“The fact that conduct may sit within the letter of the law does not mean it should be permitted. NIBA’s role as the steward of a self-regulatory Code is to operate ahead of the law, setting higher standards and intervening where practices undermine consumer confidence or professional integrity. By choosing not to do so, NIBA is not avoiding regulation — it is simply leaving regulators to do the work the industry has declined to undertake itself.” Mr Shandiman said.

By choosing to frame conflicts of interest largely by reference to existing law, NIBA effectively concedes that the Code of Practice is not the primary mechanism for driving reform. In those circumstances, regulatory oversight becomes the only practical safeguard for consumers. ACIL is now reviewing its position and considering its next steps.

ACIL Cautions That Progress on Expert Reports Masks Unresolved Structural Conflicts

The Australian Consumers Insurance Lobby (ACIL) has welcomed the improvements outlined in the Insurance Code Governance Committee’s new Oversight of External Experts: Follow-Up report, but warns that the findings risk creating a perception that the long-standing problems with insurer-appointed expert reports have been resolved — when the fundamental structural issues remain unchanged.

The Committee highlights several positive developments across insurers, including strengthened training for external experts, enhanced monitoring and quality assurance and new measures preventing experts from recommending whether claims should be accepted or denied. These are important steps forward following a series of regulatory reviews that identified systemic weaknesses in insurers’ use of external experts.

However, ACIL Chairperson Tyrone Shandiman said these changes must not be mistaken for a solution.

“These reforms are welcome progress, but they risk giving the perception that everything is now okay with expert reports. The reality is that the fundamental conflicts and risks for consumers remain.”

Mr Shandiman said the underlying issue is that insurers continue to appoint, brief and pay the experts whose reports may ultimately determine a claim outcome.

“This structure creates a major and unavoidable conflict of interest. While the recent improvements help at the margins, they do not address the core problem — consumers are still reliant on experts who are not genuinely independent.”

ACIL also cautioned that a softening insurance market and improving insurer profitability may artificially reduce disputes related to expert reports.

“If insurers feel less pressure to minimise claim costs, we may naturally see fewer disputes. But that does not mean the system has improved — it simply reflects the market cycle. The underlying risks to consumers will re-emerge in the next hard market.”

The Committee’s report itself acknowledges that progress across insurers has been slow, with many reforms still in development and not expected to be fully implemented until the 2026 financial year. It also highlights that insurers have historically held insufficient data to adequately track expert performance, complaints and report quality.

“It’s hard not to raise an eyebrow at insurers claiming they are ‘training’ external experts. These are qualified professionals engaged for their specialist expertise — yet insurers position themselves as the ones who know better. That raises real concerns about the extent to which ‘training’ becomes a channel for influence rather than independence.”

ACIL believes several critical consumer protections remain missing. Current frameworks do not:

• prevent or prohibit potential influence by insurers on expert findings

• ban performance-based incentives that could favour denial or reduction of claims

• provide an accessible pathway for consumers to challenge inaccurate or biased expert reports

• require transparency regarding vertically integrated or related-party business structures in claim supply chains

Mr Shandiman said existing mechanisms for consumers to challenge expert findings are unrealistic.

“Right now, if a consumer disagrees with an expert report, the most practical option is to fund an alternative report — often thousands of dollars — at a time when they are already financially vulnerable due to a claim being delayed or declined. This is not a fair or balanced system.”

ACIL is calling for structural reform to ensure independence, transparency and genuine accountability in the expert-reporting process.

“We acknowledge the improvements made to date, but they do not fix the foundational issues. Without strong guardrails, clearer independence requirements and accessible avenues for challenge, consumers remain exposed to unfair outcomes.”