Perspective 23 · The economics of delegated authorityOctober 2026 · 9 min read

Association insurance schemes should be run as a distribution channel

Associations are under pressure to show members what their fees buy, and insurance is one of the few member benefits with a price that members can compare. Most association schemes are still run on PDF forms, spreadsheets and an annual email. This piece looks at Australian associations, how broker-run schemes work, where they struggle, and what changes when a scheme is run as a distribution channel with its own data, workflows and controls. It also covers what the 2027 broker Code means for sharing commission with an association.

Associations in Australia

No single count

Australia has no official count of its associations. Industry bodies, professional bodies, trade associations, sporting clubs and community groups are registered under different state Acts, the Corporations Act and the ACNC, and no agency adds them together. The closest proxies each measure something different:

Registered charities. The ACNC recorded 62,867 registered charities at 1 January 2025, with record revenue of $239 billion in the 2024 reporting period. By 30 June 2025 the register had grown to 63,667, with 4,621 new registrations in the year, the most since the ACNC was set up in 2012 (ACNC Annual Report 2024–25; Community Directors). Many professional and trade associations are not charities, so this covers only part of the sector.
Non-profit institutions. The ABS counted 56,894 in-scope non-profit institutions at June 2013, employing 1,081,900 people, with income of $107.5 billion and 3.8% of gross value added. Its classification includes “business and professional associations, unions” (ABS Non-Profit Institutions Satellite Account). The data is from 2012–13 and has not been updated.
Incorporated associations. In 2007 the NSW Parliament was told there were more than 39,000 incorporated associations in NSW alone (NSW Parliament). No current national figure exists.

For comparison, ASAE cites IRS data showing 66,985 trade and professional associations in the United States in 2013 (ASAE).

Structures

Most small and community associations are incorporated under state and territory Acts, such as the Associations Incorporation Act 2009 (NSW). An incorporated association cannot distribute profits to members, and in NSW must keep at least five members (NSW Government). Larger national bodies are usually companies limited by guarantee regulated by ASIC, and charitable associations may also register with the ACNC.

The structure matters for a scheme. It decides who can sign a referral or authorised representative agreement, who is responsible for member benefits, and what cover the association needs for itself.

Pressures

Associations Forum’s 2026 membership survey of 216 organisations found new members joining at 12.7% and attrition at 9%. Budget restraints were the main reason members gave for not renewing. In the 2025 edition, budget restraints accounted for 69.1% of non-renewal reasons, up nearly 10% on the year before, followed by retirement and lack of perceived value (Associations Forum). These are self-selected surveys published in summary.

North American data points the same way. GrowthZone, an association software vendor, surveyed more than 1,000 professionals across associations and chambers and found 41% of associations reporting membership growth (GrowthZone). That figure is vendor-reported and not Australian.

Associations are still recruiting, but they are losing members on price and perceived value. A benefit with a dollar value members can see, such as a lower premium or cover they need to keep a licence, addresses that directly.

Insurance as a member benefit

Professional, trade, sporting and community associations commonly offer professional indemnity, public and products liability, management liability, tools and equipment, and travel cover to members.

The strongest version is the professional standards scheme. An occupational association can have a scheme approved that caps members’ civil liability, provided members hold professional indemnity cover at least equal to the cap. The Professional Standards Councils reported 18 schemes in force in 2024–25, covering more than 100,000 association members (Professional Standards Councils Annual Report 2024–25). For these associations, PI cover is effectively a condition of membership, and the association has to monitor compliance.

No published Australian data shows how many associations offer insurance, how many members take it up, or how much it influences joining and renewal. Brokers and associations that measure take-up themselves will know more than any public source.

How schemes and facilities work

“Scheme” covers several structures, and the differences affect both administration and regulation.

Broker-run association schemes. The broker negotiates terms with an insurer or underwriting agency for the association’s members. Each member usually holds an individual policy on common terms, often with a common renewal date. The association endorses and promotes the scheme.
Facilities and binders. A broker or agency holds delegated authority from an insurer to quote and bind within limits, and reports by bordereaux.
Group or master policies. One policy is issued to the association and members are covered as insureds or as third party beneficiaries. Section 48 of the Insurance Contracts Act 1984 gives a third party beneficiary the right to recover from the insurer even though it is not a party to the contract (DLA Piper).
Discretionary mutuals. Some associations provide cover through a discretionary mutual fund, where members pay contributions and the fund has a discretion whether to pay a claim. DMFs need an AFS licence and are not prudentially regulated; APRA stopped collecting data from them in 2016 (APRA). Perspective 21 covers mutuals in more detail.

Each structure has the same four roles. The association owns the member relationship and the channel. The broker advises, places and services. The insurer or agency carries the risk and sets terms. Where there is a mutual, it pools risk among members. Most of the administrative work falls on the broker.

Where schemes struggle

Information. Scheme business is still largely collected on paper or PDF proposal forms and typed into spreadsheets. Members answer the same questions each year, data quality drops between renewals, and underwriters price on incomplete information.

Products. Most schemes offer one core cover. Members who also need cyber or management liability are referred elsewhere or not asked. The limits are whether the scheme’s markets will write those classes, and how much work each extra small submission takes.

Fulfilment. A scheme can mean hundreds or thousands of small policies renewing on the same date. Each needs a quote, binding, a certificate of currency, endorsements and a line in the insurer’s bordereau. When premiums are small, handling each policy by hand costs a large share of the commission it earns. No published Australian data on scheme commission rates or cost per policy exists, so each broker’s own cost-to-serve figures are the evidence.

Growth. Most schemes are promoted through an annual email or a newsletter listing. Few are linked to the moments when members make decisions: joining, renewing membership, getting a licence, hiring staff or starting a business.

Remuneration and conduct risk. Associations often receive part of a scheme’s value, through commission sharing, sponsorship, administration fees or royalties. Regulators see this as a conflict. ASIC’s updated Regulatory Guide 181 on managing conflicts of interest says that “in many cases disclosure alone may be insufficient to manage conflicts”, and names the remuneration of intermediaries and authorised representatives, and distribution agreements, as sources of conflict in insurance (Insurance Business; insuranceNEWS).

Overseas regulators have gone further. Under the UK’s Consumer Duty, the FCA found that guaranteed asset protection insurance paid out about 6% of premium in claims while some firms paid up to 70% in commission. Most of the market paused sales, and firms resumed only with materially lower commission (FCA; FCA, May 2024). In the United States, litigation against AARP tested whether royalties paid to an association on member insurance sales were in substance commissions (Mondaq). Neither is Australian law, but both show where scrutiny of affinity remuneration goes.

No ASIC report deals specifically with commission paid to associations. That is a gap in the record, not approval.

A better operating model

Treating a scheme as a distribution channel, not a mailing list, leads to five changes.

1. Collect member information once. Each member completes one online questionnaire built from the scheme’s own underwriting questions. A few answers give an indicative price; the rest are asked only when the member wants firm cover. Answers carry forward to renewal, so members confirm them rather than retype them. This also helps with the 2027 Code, which doubles the minimum renewal notice from 14 days to 28 (Insurance Business). Earlier, cleaner data makes that notice achievable on a common scheme date.

2. Offer more products from the same answers. Where participating markets will write cyber, management liability or other classes, they can be offered alongside the core cover. Where they will not, the same data produces a complete submission for any market. For retail members, the design and distribution obligations require distributors to take reasonable steps so that distribution is consistent with each product’s target market determination (ASIC). Cross-selling therefore needs rules that check the target market, not blanket offers.

3. Fulfil from the scheme’s rules. Quotes, binding, certificates of currency, endorsements and bulk renewals run within agreed parameters, with exceptions referred to the broker’s team. Bordereaux for the insurer and membership and take-up reports for the association come from the same records.

4. Use funnels to grow membership. Funnels promote membership of the association with cover included, timed to joining, renewal and change events, and shared through the association’s newsletter, website and events. Section 992A of the Corporations Act sets the limits for retail members. ASIC’s RG 38 treats a quote as an offer and prohibits offers made during or because of unsolicited real-time contact; advertising that meets the financial product advertising requirements is not unsolicited contact (ASIC RG 38). Funnels that members choose to enter, promoted through the association’s own channels, fit within these rules. Outbound calls to members who have not asked to be contacted do not.

5. Share commission with the association, on conditions. A commission split can fund the association’s promotion of the scheme and give it a stake in take-up. It should be offered only where:

the association is appointed as the broker’s authorised representative, or acts under a documented referral arrangement that keeps it within what a referrer may do;
members see the arrangement disclosed before they buy, in dollars where required;
the arrangement has been assessed under the broker’s conflicts framework and reflected in any relevant target market determination; and
the split is calculated and reported from the same records as the policy, and the broker pays it from its own commission.

The 2027 Code makes these arrangements more visible. Writing on 14 October 2026, NIBA CEO Richard Klipin said: “Any client, whether retail, wholesale, strata or a business of any size, can ask what their broker is paid, and get the answer in dollars within a reasonable time.” Where commission must be disclosed, it is shown “in the quotation for each insurer compared and as a dollar amount on the invoice” (Insurance Business). The Code adds a section on conflicts of interest: a broker that cannot manage a conflict in the client’s best interests must tell the client and stop acting on that matter. Obligations that need new systems, including remuneration disclosure, have a 12-month implementation period from 1 January 2027.

An association split that a broker would not want to explain to a member who asks will not work under this Code.

Cautions and open questions

Data gaps. There is no national count of associations, and no published data on insurance take-up as a member benefit, scheme commission levels or cost per policy. The latest ABS non-profit data is from 2012–13. Any claim in this area should be tested against a scheme’s own figures.
Regulatory change. RG 181 has just been updated, the 2027 Code starts on 1 January 2027, and ASIC has recently extended dollar-disclosure relief to certain discretionary mutual products (ASIC). Scrutiny of affinity remuneration should be expected even without a specific ASIC report on it.
Overlap with broker systems. Scheme administration overlaps with broker management systems for client records, accounting and trust accounting. A scheme platform should hand over cleanly to the broker’s system of record rather than duplicate it.
Start with one scheme. The sensible order is one pilot scheme, real bound business, and measured results on take-up, cost to serve and data quality before adding automation or more schemes.

A note on Cuttleflow’s scheme toolkit

Cuttleflow’s underwriting platform is designed for underwriting agencies, insurers and discretionary mutuals, including member-based cover. Our design for brokers adds industry sales funnels, client questionnaires and staged quoting. The scheme toolkit applies that design to association schemes and facilities: one questionnaire per member, cross-sell where markets will write, fulfilment and bordereaux, association reporting, and calculation and reporting of any association share. In that design Cuttleflow does not hold premium or commission, and the broker pays any association share. These are design claims, not a description of a live system or any named party’s capability.

We would like to hear from brokers who run an association scheme or hold a facility and would consider a pilot with one scheme.

Sources

Primary sources (legislation, regulators, ABS, ACNC, Professional Standards Councils) are listed first. The 2027 Code provisions are quoted from NIBA’s published statements before the Code takes effect and should be checked against the final text.

Cuttleflow Systems · Perspective 23 · 33°53′S · 151°16′E · Sydney

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