With the public liability crisis over and the market continuing to soften, the Australian Competition and Consumer Commission (ACCC) has decided to close down the co-insurance public liability pool serving not-for-profit organisations.

The members of the co-insurance pool, trading as Community Care Underwriting Agency (CCUA), are Allianz Australia, QBE and IAG subsidiary NRMA Insurance.

ACCC Chairman Graeme Samuel says the co-insurance pool arrangements were originally authorised in March 2004. The pool, which was formed after two years of an ultra-hard market, had forced insurers to find some innovative solutions to keep faith with politicians.

“Since then market conditions have changed,” Mr Samuel said. “There are now many more insurers offering public liability insurance to not-for-profit organisations and premiums are more affordable.”

He says the market softening means not-for-profit organisations which have current policies with CCUA will be able to source public liability cover from ordinary insurers. And he isn’t satisfied the public benefits demonstrated by CCUA are likely to outweigh the detriments.

While the ACCC believes it might be possible for CCUA to amend its arrangements to remove key trade practices concerns, Mr Samuel noted that the Trade Practices Act “does not prevent pricing arrangements within genuine joint ventures where these would not substantially lessen competition”.

Additional concerns were identified over the CCUA members’ agreement not to pay broker fees, effectively reducing the role of brokers in the market.

“The ACCC believes that the arrangements might result in a limited public benefit, to the extent that it improves the availability and affordability of public liability insurance for certain not-for-profit organisations,” he said.

Nor has CCUA advanced a case for its own continuation. Mr Samuel says the ACCC didn’t receive specific evidence from CCUA to satisfy it that the arrangements significantly impacted on the availability or affordability of such insurance for not-for-profit organisations.

The ACCC has extended the CCUA ongoing authorisation to the end of next year “to allow not-for-profit organisations with current CCUA policies to find alternative arrangements”.