Key Issues
Quality and Accessibility of Risk Advice
All Australians should have access to general insurance advice provided by professional risk advisors, supported by a regulatory framework that encourages the provision of quality advice and upholds high standards of service.
As risks become more complex and coverage gaps widen, the need for accessible, professional general insurance advice has never been greater. Individuals, families and businesses, particularly those with unique or specialised risk profiles, often face significant challenges in finding and securing appropriate insurance. In some cases, this can result in devastating financial consequences when policies do not respond at claim time.
Insurance brokers play a vital role in helping Australians manage risk. Their professional advice ensures clients understand their exposures and are adequately covered, reducing the risk of underinsurance and improving claim outcomes.
The Value of Professional Advice
Insurance brokers are trusted risk advisors. They act on behalf of their clients to identify risks, compare products, arrange suitable cover, and assist with claims. Their services are particularly valuable for small and medium-sized enterprises (SMEs), which are less likely to have in-house risk expertise and often face challenges securing appropriate insurance.
A Deloitte Access Economics report found that:
- 40% of clients were underinsured before engaging an insurance broker; and
- SMEs that work with a broker are more than twice as likely to be fully covered for their claims than those who purchase insurance directly.
These outcomes speak to the critical role brokers play in protecting livelihoods, enabling recovery and ensuring confidence in the insurance process.
Barriers to Access
Despite their value, access to advice is constrained by increasing complexity and regulatory burden. Since the conclusion of the Financial Services Royal Commission in 2019, financial services professionals have undergone more than half a decade of continuous reform. While many of these reforms have been well-intentioned, their cumulative effect has led to:
- Increased compliance costs for advice businesses, ultimately borne by consumers;
- A shift in broker focus, with more time and resources directed towards compliance than on serving clients;
- Unnecessary duplication, complexity and administrative overhead that can hinder both access and consumer outcomes; and
- A deterrent effect on new entrants to the profession, potentially reducing the overall availability of quality advice.
Without a more stable and proportionate regulatory framework, there is a risk that fewer Australians, especially those in regional areas or with more complex needs, will be able to access the advice they need.
NIBA’s Advocacy Focus
To improve access to quality risk advice, NIBA advocates for:
- Ensuring that general insurance advice is provided exclusively by suitably qualified and professional risk advisors who are held to ethical standards that go beyond mere legal compliance, thereby promoting better consumer outcomes and enhanced trust in the broking profession
- Establishing a stable and predictable regulatory environment that allows risk advisors to concentrate on delivering high-quality advice to clients.
- Identifying and reducing areas of over-regulation that increase compliance costs without corresponding improvements in consumer outcomes.
A robust advice sector is the cornerstone of a resilient insurance market. By ensuring that all Australians have access to reliable, expert advice, we can support improved insurance outcomes, reduce the risks of underinsurance, and foster greater confidence in the risk management process.
