The importance of compliance training in General Insurance

The obligation to have trained, competent and experienced employees arises from many different sources of obligations:

1. AFS Licence general obligations: employees must be trained & competent and comply with financial services laws. These laws include financial service obligations in the Corporations Act, misleading & deceptive & Unfair Contract terms in the ASIC Act, APRA Prudential Standards including CPS 230 & 234, Insurance Contracts Act and Privacy Act;
2. A person providing financial product advice must have RG 146 training. Tier 2 is sufficient for general insurance products unless the person provides product advice for sickness and accident insurance;
3. Responsible Managers, Directors & Officers, Accountable Persons and Fit & Proper People should receive specific training based upon the requirements of each regulatory role;
4. Under the GI Code of Practice, a requirement that employees, Distributors and Claim Service Suppliers are trained to provide their services competently;
5. In addition, its a GI Code obligation to ensure employees are trained in respect of supporting customers experiencing vulnerability. This will most likely include trauma-based training going forward.
6. Under the Insurance Brokers Code of Practice, a professional commitment that employees maintain & improve competency through relevant qualifications, continued education & training
7. Also, Insurance Brokers under the Code must ensure that their employees, Authorised Representatives and agents receive appropriate education and training.

ANZIIF CIP and NIBA CPD points

A number of organisations use ANZIIF & NIBA methodology and points as evidence of compliance with the various training obligations.

This is a great start however ANZIIF & NIBA points are part of the membership requirements for those industry bodies. By themselves, they may not meet the various regulatory obligations.

Firms within General Insurance must stipulate specific training

A requirement to annually achieve 20/25 hours of training for CIP or CPD purposes is a a good starting point however in order to meet the various training obligations, the training must be specific enough to meet each individual obligation.

For example, a firm may mandate that employees must successfully complete 25 hours of training per year, allocated as follows:

• 7 hours for financial service laws
• An additional 3 hours for regulatory roles (responsible managers etc)
• 5 hours for the relevant GI or Insurance Brokers Code of Practice
• 3 hours on customers supporting vulnerability
• 5 hours on the products and services provided by the firm.
• The remaining hours can be left to the choice of the employee noting that '25 hours' is not a magical competency figure. Competency is both a subjective and objective test. Some employees, due to the complexity of their role or their inexperience, may require additional hours beyond mandatory requirements

The point is that general insurance firms must mandate the nature, quality and quantity of training to be undertaken, in order to meet the various regulatory & Code obligations.

Additional obligations

It is a regulatory requirement that training must be recorded in a training register. This provides evidence of meeting the AFSL general obligation therefore the register should be maintained and current.

Training should be provided during induction and periodically thereafter, usually annually. The training should include a testing of understanding and competence.

Training is also becoming a requirement for material service providers, External experts and other service suppliers. Usually this training is mandated by insurers however it is more cost-efficient for the provider to develop their own in-house training modules rather than undertaking the training provided by each insurer.

In-house training modules

Increasingly, firms are developing corporate branded in-house training modules to complement the outstanding services provided by ANZIIF.

The benefits of in-house training modules is that they contain specific case studies and scenarios based on the firms insurance products and services and tailored to their way of working by referencing the unique name of their IT systems, departments and functions.

Compliance training assistance

I provide a number of compliance training services for my general insurance clients (insurers, underwriting agencies, TPAs, insurance brokers, repairers & material service providers) including:

1. Responsible Manager training
2. Financial service laws training
3. GI Code or Insurance Brokers Code of Practice training
4. Development of a suite of in-house training modules

All training that I provide is tailored to your firms products and services, licence & Code obligations and binder/service provider agreements. In addition, I use your corporate branded templates so that you can retain the training for future use.

In addition, I can personally deliver the training ensuring an engaging and fun learning experience. These sessions can be recorded.

Contact me if you would like to explore the compliance training services I provide for General Insurance.