Senators unveil insurance wishlist
The Senate inquiry into general insurance has published its long-awaited report, giving strong backing for greater disaster mitigation spending.
The Economics References Committee was tasked with examining transparency, competition and rising prices in the industry, along with the possibility of setting up a government-run home and motor comparison website.
The report says there is “an urgent need” for governments to invest in targeted disaster mitigation and calls on the Federal Government to reconsider its response to the Productivity Commission’s inquiry, which called for increased mitigation spending of only $200 million per year.
It backs away from the proposal for an independent comparator for personal lines, but not entirely.
It acknowledges “strong concerns” that such a service could lead to a focus on price instead of value, but nevertheless says a simplified tool should be investigated further.
The committee says it’s “deeply concerned by the apparent lack of transparency in the general insurance industry with regard to product disclosure, and the detrimental effect this has on consumers’ ability to effectively compare similar insurance policies”.
It recommends requiring insurers to disclose the previous year’s premium on renewal notices, and also to provide an explanation of premium increases when requested to do so by policyholders.
An independent review of the standard cover regime is also recommended, along with the development of standardised definitions of key terms for general insurance.
The committee also calls on the Federal Government to release a response to the final report of the Northern Australia Insurance Premiums Taskforce, and recommends a review into competition in the North Queensland strata market.
And it recommends the removal of general insurers’ exemption from unfair contract terms laws – a move the industry is strongly opposed to.
More details in our regular bulletin on Monday.