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Government response to general insurance industry inquiry

Friday 5 January 2018

In December last year, the Australian Government responded to the Senate Economic References Committee Report, Australia’s general insurance industry: sapping consumers of the will to compare.

Of the 15 recommendations made, the Government actively disagreed with only one:

The Committee recommends that the Government complete a detailed proposal for a comparison tool for home and car insurance, consistent with the proposal made in the FSI Interim Report and similar to the structure of the Irish model. The proposal should include a detailed evaluation of the international evidence base of the costs and benefits of comparison services on consumer outcomes, as well as the likely benefits in the Australian context.
The Government’s reason for refusing to agree was due to the lack of evidence given in the report to support of benefits of having a government-funded comparison website.

Their response went on to say that there are already a number of companies in the private sector offering this service, and there had been no ‘market failure’ to generate the need for government intervention in the insurance industry or for providers of the comparison website.

There were six other recommendations which with the Government neither explicitly agreed or disagreed, but of which they did take note:

  • The Committee recommends that ASIC undertake a comprehensive review of the efficacy of the North Queensland home insurance (NQHI) website.
  • The Committee recommends that the Government consider introducing legislation to mandate compliance with the ACCC's good practice guidance for comparison website operators and suppliers.
  • The Committee recommends that the Government strongly consider introducing legislation to require all insurance intermediaries disclose component pricing, including commissions payable to strata managers, on strata insurance quotations
  • The Committee recommends that state and territory governments strengthen disclosure requirements in relation to the payment of commissions to strata managers.
  • The Committee recommends that the Australian Government reconsider its response to the Productivity Commission's inquiry on National Disaster Funding Arrangements.
  • The Committee recommends that, as a matter of urgency, the Australian Government work with states and territories through the Council of Australian Governments to reform national disaster funding arrangements.