The prudential regulator is looking to collect data that will give it more information about consumer experiences with insurers, the third public session of the federal parliamentary flood inquiry heard today.

Australian Prudential Regulation Authority Executive Board Member Suzanne Smith and Head of Insurance Risk Jonathan Wood also told the inquiry committee that reinsurers view the country’s exposure to natural disasters differently after the 2022 floods.

They say the change in reinsurers’ risk appetite has led to higher reinsurance costs, and that Australian insurers have had to adapt their catastrophe reinsurance programs.

“There has been an increase in reinsurance costs and … with some of the discussions we’ve had that the reinsurers are sort of reassessing ... the risk of Australia as a market,” Ms Smith said.

“And actually, the frequency of events where Australia was once seen as a potential diversifier of natural catastrophes elsewhere in the world, it’s actually now having its fair share.

“And the other point I’d like to make … is a sense by reinsurers they’d like primary insurers to hold more of the risk, and so they’re lifting attachment points, and so the excesses or the retentions by primary insurers to some extent, to encourage them to be taking more action on what they can be doing to try and reduce the risk in this market as well.”

Mr Wood says reinsurers’ new approach with Australian insurers has brought the country in line with other major markets.

But Australian insurers, which are among the biggest catastrophe reinsurance buyers, remain “attractive” to global reinsurers, Ms Smith says. “Reinsurers are still willing to operate in this market and make capital available. So we expect that reinsurance support will remain available to insurers in this country.”

The House of Representatives Standing Committee on Economics, which is looking into insurer responses to the record-breaking 2022 floods, was also told the regulator is looking to collect granular data that relates to consumer experiences.

“We don’t currently collect data at that granular level, so our intention is to expand our data collections to be more granular,” Ms Smith said.

Asked by the committee if having a public ranking of insurers would encourage them to respond better to customers, Ms Smith said: “Transparency is good because … what gets measured gets managed.”

But “without having the data, we haven’t made a decision on how that data would be used yet in terms of whether it would be a public ranking system”.

She says accuracy of data is “paramount and so we have to be really sure what we’re collecting is actually representing ... in the intents of being transparent that it’s not causing harm”.

“It’s got to be used for good and not evil because … insurers have paid out $40 billion over the past year and $9 billion to householders, so there are actually a lot of consumers who have a good experience with insurers as well,” she said.

“So not everything is a bad experience. It’s just that the stories we do hear about from consumers are heartbreaking when things aren’t going well, and the mental stress and the situations they face are very confronting.”

Earlier today, the Australian Securities and Investments Commission highlighted issues with insurer staffing levels in claims handling and dispute resolution.

“This data indicates that shortfalls in the industry’s response cannot be attributed solely to the extreme nature of [the 2022] events,” Commissioner Alan Kirkland said.

“There are signs of deeper, longer-standing issues with the industry’s processes, practices and resourcing that meant it was poorly prepared for those events.”

He says in the context of increasingly frequent and severe extreme weather, “the overall quality of the industry’s response to the 2022 floods was disappointing”.

“As a result, we have put the industry on notice. We expect action on all the issues that we identified as weaknesses. And given the time that has elapsed since the 2022 floods and storms ... we expect to see a significantly better response by the industry to the events that have occurred and continue to occur through this summer.”

Insurance executives will appear before the inquiry on Monday, and reinsurers on February 23.