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.