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Suncorp’s pre-election warning: ‘involve insurers in reform, or pay the price’

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The incoming Federal Government, whichever party is elected, must consult with the insurance industry and take a balanced approach to royal commission reforms, or risk the chaos of insurer collapse, Suncorp says.

On the eve of a Federal election, Suncorp Insurance CEO Gary Dransfield says Australians have the ability to decide which party takes control of implementing Royal Commissioner Kenneth Hayne’s recommendations.

But he urges whoever takes power to balance reforms to ensure “individual customers, entire communities and taxpayers don’t suffer from insurer insolvency and collapse, which could severely hamper community disaster recovery”.

He says Hayne’s criticisms were “at times scathing”, concluding that in too many instances commercial interests were put above those of the consumer.

“This is one of the central issues the elected government will consider as they draft new legislation to address the full suite of recommendations handed down by Hayne,” Mr Dransfield said.

But he says the industry “can’t leave it to the Government to supply all the answers”.

“By working together, the industry and Government can deliver a far more sustainable insurance industry, along with targeted reforms to strengthen customer protections and outcomes.”

If this doesn’t happen, insurers could be heading for trouble. And insurer failure, as proven by the collapse of HIH in 2001, has huge ramifications beyond just employees and shareholders.

“In Queensland, car accident victims were left waiting for operations and other medical treatment to the tune of $190 million,” Mr Dransfield recalls.

“In NSW, local councils were left with $65 million of uncovered public liability claims.

“$2 billion of construction activity came to a halt and sick and disabled policyholders stopped receiving salary continuance payments.

“Rugby Australia halted matches and community groups who needed to run fetes, events, fundraisers, couldn’t get insurance.”

Mr Dransfield says that should a large consumer insurer collapse today, the impact would be even greater.

He says Suncorp believes in four pillars “that underpin our industry and allow us to provide affordable and much-needed insurance protections to millions of customers each year”.

These are a focus on customer contracts; servicing the communities in which they operate; providing a diversified offering to the country’s unique geographic regions; and delivering value for shareholders.

“Regardless of which side of politics is successful when Australia votes this weekend, we’d urge the incoming government to consider the complex balancing act the insurance industry must strike,” Mr Dransfield says.

“Insurers also have a major role to play in ensuring that new policies and practices deliver greater value and benefits to the customer.

“Because without political and industry collaboration to drive stability and sustainability of the sector, it won’t simply be shareholders who feel the impact.”

Click here to read Mr Dransfield’s full article.