ACCC turns blame on insurers for flood farce
The insurance industry is to blame for confusion over flood definitions, according to Australian Competition and Consumer Commission (ACCC) Chairman Graeme Samuel.
In an escalation of the difference of opinion between the Insurance Council of Australia (ICA) and the nation’s consumer watchdog, Mr Samuel said ICA has not yet submitted a flood definition for public consultation, a process that “could have been completed within months”.
He was commenting on a claim by ICA spokesman Paul Giles that the industry has completed work on a definition for flood, but competition issues have bogged down the process.
Mr Samuels says the insurance industry has “pondered this issue for a number of years” and only has “itself to blame for delays in progress”.
The ACCC has responded to competition queries from ICA three times since April last year, with the regulator stating a standard definition for flood was unlikely to breach anti-competitive guidelines.
“The ACCC has made it clear to ICA that development of a standard definition for flood would be unlikely to raise concerns in itself where insurers were otherwise able to continue to offer different levels of coverage, for example, should an insurer want to offer a different level of protection,” Mr Samuels said.
“In the event that the industry had ongoing concerns over the application of competition laws, the ACCC has made ICA aware of the public interest authorisation process – a process that could have been completed within months.
“To this date ICA and the insurance industry have still not sought an authorisation for its proposed standard definition for flood.”
ICA’s website states the adoption of a standard definition for flood as one of its strategic objectives for 2007.
“The primary obstacle to achieving greater market availability of residential flood cover, for the majority of households, is the ability for insurers to map, understand and price the risk,” it states.
ICA spokesman Paul Giles said the industry could not adopt a standard definition of flood – already agreed to by ICA members – until it was approved by the ACCC.
He said a public interest authorisation process suggested by Mr Samuels to approve a flood definition was the “end of the line”.
While waiting on a compromise with the ACCC, ICA is also seeking data from state and territory governments that will assist insurers cover flood.
Mr Giles said the council requested inundation data six months ago to show insurers where floods frequently occur.
This would be fed into a national flood-mapping project that will be made available to insurers.
In an escalation of the difference of opinion between the Insurance Council of Australia (ICA) and the nation’s consumer watchdog, Mr Samuel said ICA has not yet submitted a flood definition for public consultation, a process that “could have been completed within months”.
He was commenting on a claim by ICA spokesman Paul Giles that the industry has completed work on a definition for flood, but competition issues have bogged down the process.
Mr Samuels says the insurance industry has “pondered this issue for a number of years” and only has “itself to blame for delays in progress”.
The ACCC has responded to competition queries from ICA three times since April last year, with the regulator stating a standard definition for flood was unlikely to breach anti-competitive guidelines.
“The ACCC has made it clear to ICA that development of a standard definition for flood would be unlikely to raise concerns in itself where insurers were otherwise able to continue to offer different levels of coverage, for example, should an insurer want to offer a different level of protection,” Mr Samuels said.
“In the event that the industry had ongoing concerns over the application of competition laws, the ACCC has made ICA aware of the public interest authorisation process – a process that could have been completed within months.
“To this date ICA and the insurance industry have still not sought an authorisation for its proposed standard definition for flood.”
ICA’s website states the adoption of a standard definition for flood as one of its strategic objectives for 2007.
“The primary obstacle to achieving greater market availability of residential flood cover, for the majority of households, is the ability for insurers to map, understand and price the risk,” it states.
ICA spokesman Paul Giles said the industry could not adopt a standard definition of flood – already agreed to by ICA members – until it was approved by the ACCC.
He said a public interest authorisation process suggested by Mr Samuels to approve a flood definition was the “end of the line”.
While waiting on a compromise with the ACCC, ICA is also seeking data from state and territory governments that will assist insurers cover flood.
Mr Giles said the council requested inundation data six months ago to show insurers where floods frequently occur.
This would be fed into a national flood-mapping project that will be made available to insurers.