Regulators are pushing insurers to be more transparent about the drivers of premium increases, with policyholders saying reasons for unexpected surges aren’t adequately explained. 

“It is definitely something that we hear about, and we’ve really tried to encourage insurers to be transparent about the premiums, and particularly when they are raising them,” Australian Securities and Investments Commission (ASIC) acting executive director, regulation and supervision Jane Eccleston said. 

Greens Senator Mehreen Faruqi, during a Senate inquiry hearing into the impact of climate risk on insurance premiums and availability, asked ASIC and the Australian Prudential Regulation Authority about whether they are addressing pricing transparency. 

“It is something that both APRA and ASIC have been focused on,” APRA executive director policy and advice Sean Carmody said. 

“Neither of us have specific power to be able to mandate particular disclosures, but what we have been doing is using, what you might call persuasion, and when we engage with the industry, give speeches and so on, we have been really pushing on this notion of transparency.”  

Australian Competition and Consumer Commission GM insurance monitoring and financial services Michael Eady said its monitoring focused on northern Australia and the cyclone reinsurance pool, rather than wider transparency on premium increase elements. 

“We don’t have any particular role to regulate the way the insurers disclose how the cost was built up,” he said. 

Senator Faruqi asked insurers whether there should be a pricing monitor and government enforced transparency on how premiums are set. 

IAG EGM product, pricing and governance Intermediated Insurance Australia Christa Marjoribanks said premiums were driven by factors including claim cost increases that had outpaced general inflation, reinsurance, other administration expenses and the cost of capital. 

“We certainly don’t intend to price higher than we need to to cover the elements that I’ve talked about,” she said. “We have been quite public with comments around inflation and other aspects of why prices have gone up in general commentary, and then when individual customers ring us, we are also talking to them about their individual situations.” 

Allianz Australia Chief Data Officer James Fitzpatrick noted providing specific component breakdowns of premiums would involve investment and increase costs and company research hadn’t shown consumer benefits. 

“We have done a lot of customer research and testing on what information customers find useful as part of their renewal,” he said.  “When we have done that testing it has not been something that customers have said would inform their insurance decision making, or that would come back as valuable.” 

Allianz also says it looks into individual requests for information about premium increase causes. 

But Senator Faruqi said customers should know upfront and “shouldn’t have to chase up why their premium has gone up 135%”. 

The Senate Select Committee will hold hearings in Melbourne on Monday and Canberra on Tuesday. It’s due to present a final report by November 19.