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Insurance Business | 20 Nov 2014, 09:05 AM Agree 0
A Queensland broker has called for a professional standard scheme to protect brokers and consumers if they deal with an unauthorised foreign insurer.
  • Paul | 20 Nov 2014, 10:24 AM Agree 0
    Professional standard schemes are wish lists that do not bind the courts. Corman needs to rethink his stupid idea.
  • Karen | 20 Nov 2014, 11:14 AM Agree 0
    What a fantastic idea Helena. Congratulations for thinking outside of the box. Sounds like a win/win idea. Who do you think would administer such a scheme and do you beleive the cost of membership could be low enough to be absorbed by members rather than passed onto consumers? Or do you think that the cost of membership will just compound the "Affordability Crisis" whilst exposing consumers to cover less than that afforded under a Prescribed Contract? Have you done any research into the practicalities of your idea?
  • Ageing Broker | 20 Nov 2014, 11:19 AM Agree 0
    The only way that we as a community can protect ourselves from the few UFI's who are out to defraud Australian insurance buyers is by way of government regulation and the government cannot delegate its responsibility to brokers.
    There is little point in having stringent financial standards for authorised insurers to meet only to allow UFI's to enter the market through the back door and avoid all legislative oversight.
    Cormann has shown in his protection of the FOFA amendments that he can be blind-sided by lobby groups and we must ensure that on the subject of UFI that we have open, informed and transparent discussion and not just throw away lines as has been the case so far.
  • Johnny | 20 Nov 2014, 11:43 AM Agree 0
    As a broker, such a scheme would be great, it would limit our exposure & save on PI premium.

    But I don't think it's realistic or fair. If I forget to execute a client's instruction to insure $50M worth of property & it burns, my PI ought to pay for that in full, no ifs, no buts.

    A limited liability scheme as proposed would seek to cap that. Schemes exist for certain professionals, such as accountants or surveyors for some types of financial loss. But I don't it being allowed to have one that applies in relation to loss of tangible property.
  • MD | 20 Nov 2014, 03:02 PM Agree 0
    If the Government allows UFI's they need to regulate and compensate if it goes wrong, or just don't allow in. Government needs to help consumers reduce the risk of loss not pass the risk onto the insurance industry.
  • Helena | 21 Nov 2014, 09:03 AM Agree 0
    We already work in a high risk environment, and in Johnny's example, where a broker's internal process fails and cover isn't arranged on a clients property, and a loss is suffered because of something that hasn't been done, then yes, we should be able to turn to our PI policy.

    Property owners always have a choice about their insurance – some are uninsured, some decide to accept a limited level of cover, and others take out an adequate level of insurance. Some of the available information around the Brisbane floods of 2011 says that the actions of the Wivenhoe Dam operators exacerbated the flooding - it doesn't say that they created it, so to me, that suggests that the risk of flood for the property owner in the areas affected, was a very real risk due to location, and I'm guessing the property owner that chose to make sure that they maintained adequate insurance, would have been covered at the time. The same information suggests that some 20,000 people were affected by the flooding, and some three years later, there is now a class action for negligence against the Wivenhoe Dam operators. There is currently around 4000 claimants and I wonder how many of those claimants are the property owners that chose to be uninsured, or the property owners that chose to accept a limited level of cover - these decisions were all, in fact made, way before the dam operators decision to turn on the tap.

    For me, my concern is that insurance is starting to be seen as a financial crutch in an ever increasing litigious environment and where the government itself engages ASIC & APRA to hande the prudential management on their behalf, for all of the authorized financial institutions within Australia, the broker doesn’t have access to this resourcing.

    Big Tree Insurance Group predominantly operates in a region that has limited options for intermediated insurance products and very high premiums, particulary in the domestic space. In my humble view, if the government allows the introduction of UFI's as it's currently being suggested, this is not going to be a long term solution to addressing the issues that we face , particularly in this region. It's going to create more.
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