The Australian Consumers Insurance Lobby says the industry’s initial response to parliamentary floods inquiry and code of practice review proposals is superficial, and has called for stronger action. 

In December, the Insurance Council of Australia, which has rejected ACIL’s criticism, accepted 78 recommendations that could be supported either by the industry alone or with others, and flagged that it would work through the remainder this year. 

The consumer lobby says 49 critical proposals remain unaddressed and responses that “agree in principle” represent vague commitments. 

“While ACIL acknowledges ICA’s response as a first tranche of reforms, these changes do little to address many systemic issues that continue to harm consumers,” the group says in a report titled Falling Short: Why the Industry’s Initial Response Fails to Deliver Meaningful Reform in the Code of Practice. 

“There is a growing perception that the industry continues to resist meaningful change, relying on minor adjustments rather than addressing misconduct that has caused significant consumer harm.” 

ACIL wants action on impartiality and independence in the claims management process, and improvements in the use of expert reports, cash settlement processes, vulnerable consumer support, and transparency and disclosure.  

“The industry response is yet another predictable and concerning failure to address systemic issues in the insurance industry,” Chair Tyrone Shandiman said. 

ACIL says the Australian Securities and Investments Commission should not endorse the revised code until ICA incorporates key recommendations, and that despite industry concerns over cost increases, proper processes will drive down claims costs and improve efficiency. 

The federal parliamentary floods inquiry made 86 recommendations directed at the industry, regulators and government, and the code review put forward 101 proposals, with many overlapping. 

An ICA committee of senior executives was formed last year to consider the reports and is continuing to work on responses. The industry says it has made progress towards implementing many of the recommendations from both reviews. 

The initial response said the phased approach focuses on ensuring changes are proportionate to the problem, do not constrain competition, allow flexibility and promote innovation. 

“These elements are critical in continuing to place downward pressure on premiums,” ICA said. 

For complex recommendations, such as those with affordability implications, the industry is working with the government, regulators and consumer groups to understand the issues and form solutions, and exploring alternative actions, it says. 

Insurance Council CEO Andrew Hall told an Australian and New Zealand Institute of Insurance and Finance webinar recently that the response process includes looking at the problems behind the proposals and how underlying issues can be addressed. 

“ICA doesn’t agree with Mr Shandiman,” a spokesman told insuranceNEWS.com.au today.

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