Political pressure on the insurance industry to unveil support measures similar to those the banks have devised for coronavirus-hit customers is misguided, industry insiders have said.

The pressure from the Federal Government fails to take into account key differences between the two sectors, a source told insuranceNEWS.com.au.

While banks have equity to back up their loans and can spread risk over 30 years, insurers have to accurately analyse risk over a 12-month period and be able to pay claims.

The Insurance Council of Australia (ICA) would not comment on any political pressure, but says it is working on a package of measures that will give crucial support to customers.

“Industry-wide measures are being examined but unlike the banking sector, which has generous government fiscal support, general insurance is a diverse industry that offers complex short-term contracts,” an ICA statement says.

“Insurers do not have equity via mortgages and loans in customer assets to protect their financial exposure.”

As reported in a Breaking News bulletin this morning, IAG has announced its key measures in advance of the rest of the industry.

insuranceNEWS.com.au understands that Suncorp, QBE and other insurers will also commit to similar initiatives, but they are waiting for approval from the Australian Competition and Consumer Commission (ACCC).

The ACCC said today it will “continue to actively engage with governments and businesses about potential authorisations that support co-ordination between competitors that is ordinarily prohibited but which is necessary and in the public interest at this time”.

As insuranceNEWS.com.au reported in a Breaking News bulletin this morning, IAG’s key measures are:

• Travel insurance refunds for any unused proportion of premiums, including full refunds where customers have not yet travelled and have not claimed

• Deferred premium payments for up to six months for small businesses experiencing financial hardship

• Refunds on the unused portion of premiums for small businesses who cancel their insurance, with no administration or cancellation fees

• Small businesses which need to close premises due to the impact of COVID-19 can maintain full insurance cover on the premises with no changes to premium

• Reduced timeframes in making payments to suppliers from 30 to no more than 15 business days.

IAG expects the measures to be in place by Monday.

insuranceNEWS.com.au has previously reported growing calls to refund travel premiums, and demands from the National Insurance Brokers Association President Eric Harris for more support for small businesses.