Coalition leader Peter Dutton has doubled down on his interventionist threats as he looks to hold insurers to account for the “mess” of unaffordable premiums – but rival politicians and industry sources have poured scorn on his proposed solutions.

As insuranceNEWS.com.au reported yesterday, Mr Dutton believes “we need depth in the insurance pool” to make sure consumers are not ripped off.

“As we’ve done with the supermarkets, where we have threatened divestment if consumers are being ripped off, similarly, in the insurance market, we will intervene to make sure consumers get a fair go,” the Opposition Leader said on Sunday.

Yesterday, he backed up those comments, referring to people he has met struggling to access cover in the fire-hit Grampians region of Victoria and the flood-ravaged Queensland town of Ingham.

“I’ll just put the insurance sector on notice right now that when we win the election, I expect them to bring down insurance premiums significantly,” he said.

“And if they don’t, then I will deal with the industry afterwards, because we can’t have people who can’t afford to insure against public liability. We can’t have businesses that can’t conduct their tourism operations because they can’t get insurance. And we can’t have people going without car insurance because their premiums have gone up by 20 or 30 or 40%. It’s unacceptable.”

He says the Liberal Party believes in a free market, “but the free market is failing at the moment” and insurance companies need to fix the problem.

“I’ve been clear about how serious I think this problem is. It’s something I’ve heard from one end of the country to the other, and we’re going to act on it if the insurance companies don’t tidy up this mess.”

Independent MP Zali Steggall says while she shares Mr Dutton’s concern over “astronomically high insurance costs”, his threatened divestment won’t reduce those costs or tackle climate risk.

“Peter Dutton’s threat to break up the country’s insurers is a populist thought bubble so deeply anti-free market that it is hard to reconcile it is a policy coming from the Liberal Party,” she said.

“Why are they pushing populist rhetoric masquerading as a credible solution?”

Labor’s Patrick Gorman, Assistant Minister to the Prime Minister, also acknowledges there are “challenges” in the insurance market.

“But I think what’s really unfair for people who are looking at their insurance bills is for Peter Dutton to put out a thought bubble like this with no detail, no costings, no explanation of what will actually happen, and not even support from within his own Coalition.”

The Insurance Council of Australia yesterday said the market is “very competitive”, with 30 companies offering home and motor cover, and the only sustainable way to bring down premiums is to reduce risk.

A senior insurance industry source told insuranceNEWS.com.au the benefits of scale mean a significant chunk of the market will always be in the hands of half a dozen or fewer players – and that’s the same with many consumer-focused industries.

“Insurance is not unique in that regard,” he said. “There is a certain level of scale required just to get a ticket to the game.”

The source said all insurers face the same inflationary pressures on claims costs, and they need to make a profit to retain access to capital.

“Divestiture is not the answer. Breaking up the insurers doesn’t deepen the pool; it creates more, but shallower, pools.

“Insurers are getting back towards targeted returns, but for several years they’ve lost money on home insurance. It’s a bit hard to be gouging and making a loss at the same time.

“If you didn’t know better, you’d think that we’re heading into a cost of living-focused election campaign.”

However, the Australian Consumers Insurance Lobby says it supports Mr Dutton’s “tough stance” and has written to him requesting a meeting.

“Peter Dutton’s comments have caused a major stir within the insurance industry, which is exactly what’s needed to drive change," chair Tyrone Shandiman said. 

“Insurers have treated both policymakers and consumers with contempt for years, putting profit ahead of fairness, resisting meaningful reform, and failing to take appropriate action to improve affordability.”

Mr Shandiman says in addition to divestment powers, the Coalition should consider a royal commission on the industry, stronger regulation of the insurers’ code, and independent consumer advocacy in claims and expert reports, including public loss adjusters.