The Insurance Council of Australia (ICA) has raised objections to some key Australian Competition and Consumer Commission (ACCC) recommendations on insurance, including the banning of broker commissions.

The ACCC published its final report late last year following a three-year inquiry into insurance affordability in northern Australia, making 38 recommendations.

In a response dated April 30 but only published in recent days, ICA outlines a number of proposals that it does not support.

“Given the unique nature of general insurance and the market structures within which it is sold, the industry does not support a ban on commission-based remuneration arrangements,” ICA says.

It says a Hayne-inspired review set to take place soon will consider, among other things, whether exemptions to the ban on conflicted remuneration for general insurance products remain justified. “These issues are best considered within the context of that review,” ICA says.

Other recommendations challenged by ICA include setting up a national home insurance comparison website and always giving insureds the choice between a cash settlement and an insurer-managed repair/rebuild.

ICA says such a website wouldn’t help make insurance more affordable and private companies already provide comparison services.

“The ACCC report itself provided evidence that, given the competitive market dynamics for insurance in northern Australia, price comparison websites would likely act to put upward (rather than downward) pressure on premiums,” it says.

“The insurance market in northern Australia is comprised of a small number of insurers who are each seeking to limit their exposure to natural perils through distribution and pricing strategies.”

On cash settlements, ICA says while these are sometimes necessary, insurers prefer to carry out repairs themselves.

“For example, the customer will receive a lifetime guarantee on the workmanship of repairs from their insurer and will not need to appoint a building manager or manage the entire repair process themselves (including delays, issues, quality and cost); and customers will benefit from being able to rely on the insurer’s network of qualified building and repair professionals.”

ICA says it will need to give further consideration to the recommendation for direct government subsidies for those struggling with high premiums, and says there are “critical policy issues” to be resolved on a cyclone reinsurance pool, which the ACCC did not support.

An ICA spokeswoman told insuranceNEWS.com.au the response was drafted before the announcement of a government-backed, $10 billion reinsurance pool for cyclone and cyclone-related flood.

“The announcement of a reinsurance pool for the region is a significant commitment by the Federal Government, demonstrating a goal shared by insurers of improving insurance affordability and availability for homeowners and small businesses living with this threat,” the spokeswoman said.

“Numerous governments, agencies and stakeholder groups have undertaken reports into this issue over many years – the problem is well understood.

“But this is the first time any government has clearly stated its position and its preference, and insurers are responding to that clear policy preference in a constructive and thoughtful way – as would be expected.

“We are participating in the process set up by Treasury and look forward to further details on the proposed design and implementation model.”

ACCC recommendations supported by ICA include abolishing insurance stamp duty, expanding the remit of the Australian Building Codes Board to include property protection, and standardising definitions of prescribed events.

The Federal Government has yet to respond to the ACCC’s report, which was published on December 28.

Click here to see the full ICA response.