The Insurance Council of Australia’s response to recommendations from the code review and federal floods inquiry set out its thinking on reforms, but also led to claims it is kicking too many cans down the road.

An initial response in December addressed straightforward recommendations, so the follow-up on remaining proposals was always going to be more challenging, and possibly controversial.

In between “agree” and “disagree”, the document responses include “agree in principle”, “noted”, “support the intent” and “understand the intent”, with reasoning provided.

Financial Rights Legal Centre senior policy and advocacy officer Drew MacRae says there are some clear responses, but “there are a significant number where they are vague”.

He told insuranceNEWS.com.au: “It’s not clear how they are going to implement something, or what they are going to do. For some of the really important ones they have said, ‘We’ll just leave it up to separate insurers.’ Are they going to track that, is anyone going to monitor it?”

The ICA action plan reflects the overlap between federal parliament’s 2022 floods inquiry and the independent panel’s industry code of practice review, which took place in parallel last year. It also takes account of two other inquiries.

The federal government is yet to respond to the floods inquiry recommendations directed its way.

Many of the proposals aimed at insurers dovetailed with issues examined in the code review, and were expected to be picked up through that process.

“If we’re generating some recommendations where it’s unanimous and it aligns with the code committee, then I think it makes it hard for the industry to bat them away without very good reason,” parliamentary probe chairman Daniel Mulino told insuranceNEWS.com.au before his inquiry’s report came out last year.

ICA says of 150 combined recommendations for insurers, 109 are agreed or agreed in principle, 28 require further investigation by industry, 10 require individual insurers to determine their practicality or appropriateness, and three are not supported.

The rejected recommendations aimed to ensure consumers are not charged more for choosing monthly payments and that renewing policyholders are not disadvantaged compared with new customers.

ICA says it is not the code’s purpose to prescribe pricing approaches, and the proposals cannot be implemented due to competition law constraints.  

Code review chair Helen Rowell says the panel is disappointed at the number of recommendations left to individual businesses and by the lack of action in some areas.

“I think ICA has a role to play in really pushing hard and galvanising the industry to move forward on some of these things,” she told insuranceNEWS.com.au.

The review panel and consumer groups noted the response on pricing did not flag further investigation, or an approach to the Australian Competition and Consumer Commission.

“Our view was that the ACCC would be relatively open to some of the proposals that we had put forward, given that they were obviously to the benefit of consumers,” Ms Rowell said.

Consumer groups and the review panel also called for the code to be made part of contracts with consumers, to strengthen enforceability. This has already been done in the banking sector.

Mr MacRae says the pricing issues raised have been identified in several inquiries, with “loyalty taxes” addressed in the UK. If insurers will not act, it is time for government to step in, he says.

A “support the intent” response to a floods inquiry proposal to more clearly communicate the basis for premium prices is also disappointing, Mr MacRae says, given consumers want to know about risks affecting them, without needing commercially sensitive information.

“What we care about is the component of that price that is linked to a risk that we should know about as consumers, because that will produce improved outcomes,” he said. “We are trying to deal with risk, but withholding that information is really doing our society a disservice.”

Financial Counselling Australia says the action plan has some good aspects, particularly the commitment to a vulnerability framework. It urges insurers to commit to the framework, and to make sure it is effective by improving the code of practice.

The Australian Consumers Insurance Lobby says other areas requiring improved responses include expert reports, cash settlements, temporary accommodation, flexibility on rebuilds and renewal issues where there is a long delay in claims handling or project competition.

The ICA action plan also includes the industry’s response to recommendations made by parliamentary inquiries into the impacts of climate change on premiums and into financial abuse.

ICA says it has started redrafting code provisions and is developing a vulnerability framework, insurers are investing in improved systems and human resources – as shown by the Ex-Cyclone Alfred response – and an expert reports best practice guide and protocols to prepare for and respond to natural disasters have been delivered.

“Through this action plan, we are seeking to ensure that customers experiencing vulnerability are appropriately identified and supported, insurers have the appropriate systems and processes to respond effectively to increasing natural disasters and provide the best possible customer experience, and that the industry demonstrates strong governance and is accountable and transparent,” CEO Andrew Hall said.

Consumer groups want more action as the industry works through the code of practice update process, while government and regulatory responses to flood inquiry recommendations are still to come.