Brokers Warned: Softening Market No Excuse for Unfair Remuneration Practices

The Australian Consumers Insurance Lobby Inc (ACIL) is warning insurance brokers not to exploit softening market conditions to alter remuneration structures to the detriment of clients — particularly without proper disclosure and informed consent. ACIL has asked ASIC, the ACCC, and the Insurance Brokers Code Compliance Committee to be on the lookout for this unscrupulous behaviour.

Brokers, as licensees under an Australian Financial Services Licence (AFSL), are required to act efficiently, honestly and fairly. Changing remuneration models during periods of premium reductions without transparent disclosure may contravene these core obligations.

ACIL Chairperson Tyrone Shandiman said “We have seen examples from previous soft market cycles, including in 2016, where brokers negotiated 20% premium reductions but failed to pass those savings on. Instead, they increased commissions on top of prior fee-for-service models, leaving clients significantly worse off without proper disclosure.  This conduct has even occurred with large, sophisticated clients such as high-rise buildings, showing that the industry's assumption that wholesale clients do not require disclosure is dangerously misplaced.”

ACIL notes that detecting this behaviour is not difficult. It is relatively simple for licensees and regulators to pull annual income reports from broking systems and identify sharp increases in remuneration following premium reductions. Where there has been no material change in the risk profile or policy structure, such increases warrant further scrutiny.

In its submission to the recent NIBA Code of Practice Review, ACIL made a number of recommendations specifically designed to safeguard consumers against this type of unscrupulous conduct, including:

• Requiring brokers to disclose any changes in their remuneration structures from the prior year, particularly where those changes disadvantage the client.

• Standardising disclosure obligations across both wholesale and retail clients.

• Requiring brokers with remuneration above standard industry levels to demonstrate the added value provided to the client.

Mr Shandiman added: “At a minimum, brokers must be upfront with clients when changing remuneration structures — especially where the benefit flows to the broker at the client’s expense. That means ensuring clients are properly informed and their consent is genuinely obtained. If current remuneration models are, as the industry claims, the right and fair way for brokers to be paid — then there should be no issue prominently displaying this information to clients. Concealing it doesn’t just undermine trust — it damages the professional image of the entire broking industry and reinforces negative perceptions about a lack of transparency.”

ACIL will continue to work with regulators, code monitors and industry bodies to improve standards and ensure fair treatment for all insurance consumers.

Consumer Advocates Urge NSW Government to Hold Firm on Strata Commission Ban

The Owners Corporation Network (OCN) and Australian Consumers Insurance Lobby Inc. (ACIL) have issued a joint call for the NSW Government to stay the course on banning strata insurance commissions, warning that to backtrack now would set a dangerous precedent and reward years of unethical industry conduct.

The call comes in response to a recent industry commentary raising concerns that the reforms could threaten industry stability. But consumer advocates say those concerns are being overblown by vested interests seeking to delay or dilute long-overdue reform.

The proposed ban is not about destroying an industry – it is about ending a culture of conflicted payments and replacing it with one that rewards transparency and integrity. Businesses that already operate without commissions will no longer be undercut by those profiting through hidden fees and conflicted relationships. This reform will finally create a level playing field where lot owners can make informed decisions and ethical businesses are not penalised for doing the right thing.

Karen Stiles, Policy Director of OCN, said:

“The Government’s own investigations have exposed extensive misconduct in strata insurance. These practices have cost lot owners dearly – in trust, transparency, and inflated premiums. The proposed ban on commissions is a vital step toward restoring integrity in the system. We cannot allow commercial interests to undermine consumer protections.”

Tyrone Shandiman, Chairperson of ACIL, added:

“The problems in strata insurance are not isolated incidents – they’re the result of systemic, unethical behaviour that has gone unchecked for too long. There must be consequences. If an industry can profit through poor conduct and then lobby its way out of reform, it sends the message that the risk was worth it. That cannot be the legacy of this Government’s reform agenda.”

The organisations also cautioned against relying on industry-driven surveys and commentary that may distort the true picture of consumer harm.

“We urge the Government to listen to the voices of lot owners, not just those profiting from the status quo,” Stiles said. “This is a once-in-a-generation opportunity to build a fairer system. The Government must follow through.

Self-Regulation is Failing – Time for Government to Take Over the Insurance Code

The Australian Consumers Insurance Lobby (ACIL) has slammed the Insurance Council of Australia’s (ICA) response to the General Insurance Code of Practice review, stating that self-regulation in the insurance industry is failing consumers. With insurers cherry-picking recommendations and refusing to adopt key reforms from its own independent reviews and government inquiries, ACIL believes the government must now consider taking control of the Code.

Click Here to View Copy of the Report:

ACIL Code of Practice (Self Regulation is Failing) Final.pdf

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“The blatant disregard for independent review recommendations and findings from government inquiries is yet another example of the industry behaving poorly,” said Tyrone Shandiman, Chair of ACIL. “The insurance industry should not be dictated to by insurers—it must work for consumers.”

ACIL has highlighted three critical areas where the industry response is inadequate and harmful to policyholders:

• Expert Reports – Insurers continue to rely on biased expert reports to deny claims, yet there is no clear timeline for finalising the Use of Expert Reports: Industry Best Practice Standard. Without enforceable rules, insurers will continue using conflicted experts to support claim denials.

• Cash Settlements – Insurers have sidestepped recommendations to ensure fairer cash settlements, leaving consumers at risk of underpaid claims that fail to cover the true cost of repairs.

• Vulnerability Protections – While insurers claim to support a Vulnerability Framework, there is no clear timeline for completion or commitment to enforceable obligations. This leaves vulnerable consumers at risk of inadequate support when they need it most.

In addition to these critical issues, insurers continue pricing practices that are detrimental to consumers (C-89 & C-88), including charging more for instalment payments and offering higher renewal quotes than those available to new customers.  They have rejected calls to guarantee temporary accommodation until claims are finalised (PFI-10 & C-69), refused to offer fairer premiums during claims delays (PFI-60), and opposed flexibility in rebuilds (PFI-26) despite pushing for $30b of government resilience funding. Insurers also refuse to make the Code contractually enforceable (PFI-47), weakening accountability.

Despite rejecting these critical reforms, insurers now want ASIC to sign off on the Code of Practice, despite failing to implement key recommendations. “How can ASIC endorse a Code where insurers have ignored their own independent recommendations without a rigorous process to justify these decisions?” said Shandiman.

ACIL is urging the Insurance Council of Australia to reconsider its response and commit to meaningful reforms. “If insurers refuse to act in the interests of consumers, we will actively lobby for a government takeover of the Code to ensure policyholders receive the fairness and protection they deserve,” Shandiman said.