The insurance industry operates under a General Insurance Code of Practice directed at standards and consumer protection and other legislation covering the contents of insurance policies and standard cover for some domestic insurance policyholders. Insurance marketing and selling practices have been reformed by financial services legislation.


Mark Attard

Partner, Clyde & Co.

Insurance agents and brokers

Who are insurance agents and brokers?

Insurance agents (also called authorised representatives) and insurance brokers are involved in marketing and selling insurance policies to the general public. Sometimes, there is a tendency to confuse their roles.

Insurance agents act for insurance companies. They market and sell insurance policies for an insurer or insurers under an agreement with those insurers. Agents are normally paid commission by the insurer.

On the other hand, insurance brokers normally represent the interests of consumers and will advise on a range of available insurance products to meet a consumer’s needs.

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 agent or broker in arranging that insurance.

Parts 4 and 5 of the General Insurance Code of Practice 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.

Insurance agents and brokers and the Corporations Act


Under Part 10.2 of the Corporations Act 2001 (Cth) (‘Corporations Act’), most insurance 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.

Disclosure requirements

The Corporations Act imposes additional disclosure requirements on agents, brokers and insurers that market and sell domestic insurance.

A financial services guide must be provided by licensees to retail clients as soon as possible. These guides contain information about commissions and the dispute resolution procedures available to policyholders (pt 7.7).

Insurance agents and brokers must give consumers a product disclosure statement at the earliest possible time.

Where the relevant insurance policy has been recommended by an insurer or broker before the contract is entered into, the Corporations Act also requires the consumer to be provided with a statement of advice. This 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).

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