Insurance agents or authorised representatives and insurance brokers are both involved in the marketing and sale of insurance policies to the general public, and sometimes there is a tendency to confuse their roles. Generally speaking, insurance agents or authorised representatives A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. for insurance companies. They market and sell insurance policies for an insurer or insurers under an agreement with those insurers. They are normally paid a commission by the insurer.
An insurance broker, on the other hand, normally represents the interests of the Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. and A document that sets out what a person wants to happen to their money and other property after they die. advise on a range of available insurance products to meet the consumer’s needs.
Parts 4 and 5 of the Insurance Code require insurers to ensure their employees and authorised representatives receive adequate training in respect of their insurance policies and services. Insurers are required to measure the effectiveness of their training and continually monitor the performance of their staff and representatives.
Under Part 10.2 of the Corporations Act 2001 (Cth) (‘Corporations Act’), most brokers must be licensed. A broker can only use the descriptions ‘insurance broker’, ‘general insurance broker’ or ‘life insurance broker’ if authorised to do so through a condition in its licence. Under the Corporations Act, agents do not need a licence if they are authorised representatives of a licensed insurer.
The Corporations Act imposes additional Providing information to another person or institution as required by a contract or other legal process. requirements on agents, brokers and insurers that market and sell domestic insurance.
A Financial Services Guide (FSG) must be provided by licensees to retail clients as soon as possible. A FSG contains information about commissions and the dispute resolution procedures available to policyholders (pt 7.7).
A Product Disclosure Statement must also be provided at the earliest possible time.
Where the relevant insurance policy has been recommended by the insurer or broker before the An agreement that the law will enforce. is entered into, the Corporations Act also requires the provision of a ‘statement of advice’. The statement informs the consumer of the basis upon which the recommendation is made and discloses any potential conflicts of interest that may arise in the giving of the advice (pt 7.7).
Policyholders need to be mindful of the roles of brokers and agents. If a policyholder finds that the cover provided under an insurance policy is insufficient or coverage for a claim is declined by an insurer, then pay careful attention to the responsibility of the A person who acts for someone else. They can make decisions, carry out tasks or make agreements for the other person. For example, if you ask someone to bid for you at an auction they will be acting as your agent. or broker in arranging that insurance.