The Insurance Council of Australia (ICA) has raised objections to some key recommendations of the Australian Competition and Consumer Commission (ACCC) on insurance, including the ban on brokerage commissions.
The ACCC released its final report late last year following a three-year investigation into the affordability of insurance in northern Australia, making 38 recommendations.
In a response dated April 30 but published only in recent days, the ICA presents a number of proposals that it does not support.
“Given the unique nature of P&C insurance and the market structures in which it is sold, the industry does not support a ban on commission-based compensation arrangements,” CIA said .
He says a Hayne-inspired review expected to take place soon will examine, among other things, whether exemptions from the conflicting pay ban for general insurance products remain justified. “It is best to look at these issues in the context of this review,” says the CIA.
Other recommendations challenged by the CIA include setting up a national home insurance comparison website and always giving policyholders the choice between a cash settlement and a repair / rebuild managed by the CIA. insurer.
The CIA says such a website would not help make insurance more affordable and that private companies already offer comparison services.
“The ACCC report itself provided evidence that, given the dynamics of the competitive insurance market in Northern Australia, price comparison websites would likely act to put pressure on the market. increase (rather than decrease) on premiums, ”he says.
“The insurance market in northern Australia is made up of a small number of insurers each seeking to limit their exposure to natural hazards through distribution and pricing strategies.”
When it comes to cash settlements, according to the CIA, although these are sometimes necessary, insurers prefer to carry out the repairs themselves.
“For example, the customer will receive a lifetime repair labor warranty from their insurer and will not need to appoint a building manager or manage the entire repair process themselves (including including delays, problems, quality and cost); and customers will benefit from being able to count on the insurer’s network of qualified building and repair professionals.
The ICA says it will need to further consider recommending direct government subsidies for those struggling with high premiums, and says there are “critical policy issues” to be resolved on a cyclone reinsurance pool, which ‘ACCC did not argue.
An ICA spokeswoman told insuranceNEWS.com.au the response was drafted before the announcement of a government-backed $ 10 billion reinsurance pool for the cyclone and cyclone-related flooding .
“The announcement of a reinsurance pool for the region is an important commitment by the federal government, demonstrating a goal shared by insurers to improve the accessibility and availability of insurance for homeowners and small businesses living with it. this threat, “said the spokesperson.
“Many governments, agencies and stakeholder groups have been reporting on this issue for many years – the problem is well understood.
“But this is the first time that a government has made its position and preference clear, and insurers are responding to this clear policy preference in a constructive and thoughtful way – as one would expect.
“We are participating in the process put in place by the Treasury and look forward to further details on the proposed design and delivery model. “
ACCC recommendations supported by the ICA include abolishing the insurance stamp duty, expanding the mandate of the Australian Building Codes Board to include property protection, and standardizing definitions of prescribed events. .
The federal government has yet to respond to the ACCC report, which was released on December 28.
Click on here to see the full response from the CIA.