Implementing the parliamentary flood inquiry’s recommendations would put downward pressure on premiums despite insurers having to “lean in a bit more” in some areas, committee chairman Daniel Mulino says. 

“If you put in our recommendations as a job lot, and life’s not like that, unfortunately, but let’s say, I’m very confident it would be a significant downward pressure,” he told an Australian and New Zealand Institute of Insurance and Finance webinar. 

Dr Mulino said some of the recommendations would bring claims handling efficiencies, while a greater focus on linking household mitigation and insurance would reduce pricing. 

“Insurers have acknowledged to me they’re not doing a good enough job with flood of linking household-level mitigation to lower premiums,” he said. “There’s a fairness issue there, but there’s also an incentive issue. We need to better incentivise household-level mitigation.” 

Dr Mulino said areas where insurers are being urged to “lean in a bit more”, including temporary accommodation and maintenance for hidden areas such as house stumps, represent a small minority of cases but would enable many families to be treated better. 

“The net impact, I believe, is downward pressure,” he said. 

The inquiry report also supports community-level resilience projects, improved land use planning and ending state and territory taxes on cover. 

Dr Mulino said referencing the levee project in Roma, Queensland, that led to lower premiums has become almost a cliché given “we haven’t done enough Romas since then”, and more projects are needed over the next 10 to 20 years. 

Many report recommendations could be introduced by the insurance industry immediately and in conjunction with industry code of practice reforms, and the Australian Securities and Investments Commission could look at regulatory guidance “pretty quickly”, he said. 

Dr Mulino is hopeful the government will respond to the report before the next election, with legislative changes required around increased ASIC data-gathering powers and on standardised terms. 

“I don’t think they’re going to be overly controversial. It’s just going to be a matter of getting those into the legislative agenda early next term,” he said. 

Recommendations to strengthen ASIC’s powers and oversight would ensure action goes beyond the obligations imposed on code of practice signatories, he said. 

The inquiry has recommended ASIC collect data on 10 key customer experience measures, including claim processing times, dispute resolution and the payment of cash settlements, which emerged during the inquiry an area requiring more guardrails. 

“If the insurer is struggling to manage the project, it beggars belief that a family struggling ... dealing with their lives being turned upside down is going to be able to do it better,” Dr Mulino said. “This is an area we think is a real priority for stronger regulation, but also much more visibility.” 

The insurance industry has less data collected on it than other financial services sectors, and inconsistent approaches between companies make it difficult to meaningfully compare insurers, he told the webinar.

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