The Australian Consumers' Association (ACA) says policyholder protection is weak and needs to be beefed up.

The association has been vocal on the subject of policyholder rights since HIH Royal Commissioner Justice Neville Owen recommended a scheme for more protection in his April 2003 report.

The Federal Treasury released a report months ago outlining the pros and cons but the issue seems to have been on the backburner. Catherine Wolthuizen, ACA’s Senior Finance Policy Officer, says it doesn’t even have to be an industry-funded scheme, “but something is needed”.

“Most consumers aren’t in a position to assess an insurer’s financial stability, and they need to know their premium is safe,” she said. “The industry and consumers don’t want a repeat of HIH.”

ACA CEO Peter Kell told Sunrise Exchange News in June that Treasury had “in a way sabotaged” the principle of a scheme by teaming insurance with banking.