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ASIC urges reform on previous premium display

The Australian Securities and Investments Commission (ASIC) says clearly displaying the previous year’s premium on renewal notices would increase competition and comparability for home and car policies.

The regulator says UK trials show this encourages people either to switch or negotiate a better deal when prices surge.

It is among several alternatives to developing a comparison website put forward by ASIC in a submission to a Senate inquiry.

“Although we are aware of one insurer that has recently commenced displaying last year’s premium on renewal notices, legislative change would be required to compel all insurers to do this,” ASIC says.

Better claims and disputes data would also be useful, with information currently published by the Financial Ombudsman Service and the general insurance Code Governance Committee not easily available in a way that helps consumers, according to the submission.

The regulator says increasing an insurer’s ability to provide user-friendly electronic disclosure would aid consumer understanding and comparability.

A comprehensive comparison website could enhance consumer choice, but a range of issues need to be addressed, it says. ASIC suggests a detailed study of establishment and maintenance costs, while legislative changes or authorisations may be required so insurers can work together to standardise policy terms and definitions.

“Where products are more complex, with a wide range of interconnected features, such as with home, car and strata insurance, care needs to be taken that comparison sites do not oversimplify the decision-making process due to inadequate information,” it says.

Margaret Shaw, the consumer representative on the Northern Australia Insurance Premiums Taskforce advisory panel, says in a submission that north Queensland residents are still battling excessive premiums, especially for strata cover, and asserts there is a lack of transparency.

She calls for a number of changes, including an overhaul of strata cover and rules limiting premium increases, particularly where a property has had no claims. Insurance industry self-regulation is not working, she says.

The Senate Economics References Committee is due to report by June 22.

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