The issue matters for office-based SMEs because many rely on insurance brokers to navigate increasingly complex commercial cover. A broker may assist with public liability, professional indemnity, cyber, property, business interruption, management liability and other policies that can be difficult to compare on price alone. When the cost of advice and distribution is not plainly understood, business owners may find it harder to assess whether a recommendation represents value.
The latest draft code would improve some disclosure settings, including clearer dollar-based information in certain circumstances and expanded requirements for strata clients. However, the controversy is that it does not fully adopt an earlier independent recommendation that all individual and small business clients receive remuneration disclosure as a standard requirement, regardless of the insurance product involved.
That distinction is important. Under the current framework, disclosure obligations are closely tied to the legal definition of a retail client, which does not always capture small businesses buying commercial insurance. For a sole trader, consultancy, agency, allied health practice, professional office or growing startup, the practical result can be uneven transparency depending on the type of cover being arranged.
For business owners, the immediate takeaway is not to avoid brokers. Good advice can be valuable, particularly where policies have exclusions, sub-limits or industry-specific conditions that are not obvious from a headline premium. The more useful response is to ask better questions before renewal or when comparing cover.
Office-based SMEs should ask their broker to explain, in dollar terms where possible, how they are paid by the insurer and by the client. They should also ask whether alternative policies were considered, whether any insurer relationship influenced the recommendation, and what service is provided after the policy is placed. Claims support, annual reviews, risk advice and market access can all affect value.
The consultation period gives industry participants an opportunity to test whether the draft code strikes the right balance between practical advice delivery and clearer client protection. For SMEs already under pressure from insurance affordability, rent, wages and compliance costs, transparency is more than a governance issue. It is part of making confident, informed decisions about the cover that protects their office, people and cash flow.
Please Note: If this information affects you or is relevant to your circumstances, seek advice from a licensed professional.
