Calls for ASIC ‘crack down’ in wake of Youi allegations

Calls for ASIC ‘crack down’ in wake of Youi allegations | Insurance Business

Calls for ASIC ‘crack down’ in wake of Youi allegations
The recent allegations levelled against direct insurer Youi have seen some brokers call for an ASIC crack down on the direct market as brokers are presented with a great opportunity to highlight their worth.

David Coe, managing director of Northwest Insurance Brokers, told Insurance Business that the allegations made against the direct insurer require a change.

“It doesn’t surprise me in one sense that this has happened and it has got to be something that needs to be really cracked down on by ASIC,” Coe said.

Coe added that the Youi case reminded him of the 1990s when the FSRA attempted to clean up the direct market model. Those efforts attempted to shift the focus towards more professional behaviour and acting in the interest of the customer rather than always focusing on profits and getting income through the door.

“There has got to be something or someone that can look at perhaps managing this better so that we aren’t thrown back into the dark ages and all the good that has been done in the past several years is not undone by one or two players in the market who want to go price driven,” Coe said.

Kay Jackson, director of Simplex Insurance Solutions, called the allegations “really frustrating and disappointing,” as they call into question the role of the wider insurance industry in the minds of the general public.

“I know that the broking industry always seems to be pushed in with financial planning and some of the troubles and the woes that they have had and I don’t really think that ASIC and the regulators understand what an insurance broker does,” Jackson said.

“Because we are paid by commission, we have to prove why we decide that a product is good for clients. Why don’t direct insurers have to do that?

“Why are they just allowed to quote absolutely anything that could totally not suit the client’s needs?”

Helena Blum, principal of Big Tree Insurance Group, told Insurance Business that if the accusations are proven true “a whole of industry initiative” will be needed in response.

She added that direct insurers tend to promote the cost of insurance and these players tend to have big marketing budgets, "so this message tends to be everywhere”.

“This conditions people to think that the cheapest deal is the best deal when in fact it may not be suitable at all," she said. “I’ve never understood the conflicting marketing message put forward by the industry itself and I think that for real change to happen, it needs to come from within the industry.”

Both Coe and Jackson noted that, whilst their businesses have lost a small number of clients to direct competition, the allegations against Youi present brokers with an opportunity to highlight their worth to current, former and perspective clients.

Coe has already reached out to clients to show the difference between the broker and direct market and is ‘hopeful’ that the recent Youi allegations will drive more clients back to the broker market.

In a statement, Youi said that they take the allegations “extremely seriously,” and CEO Danie Matthee said the business welcomes customer feedback.

“We take responsibility for the actions of our people and when mistakes occur we respond immediately to resolve them,” Matthee said.

“We welcome feedback which provides us with an opportunity to improve and we actively follow up with anyone who indicates they have had an unsatisfactory experience.”

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