Banking and Financial Services Ombudsman Consumer Director Fiona Guthrie has thrown down the gauntlet to the insurance industry.

Speaking at the Insurance Ombudsman Service conference in Melbourne yesterday, Ms Guthrie said insurers needed to "look in the mirror" and assess their strengths and weaknesses.

She highlighted three areas in need of improvement: underinsurance, helping out customers with financial hardship, and social responsibility.

Ms Guthrie believes the Australian Securities and Investments Commission report into the 2003 Canberra bushfires brought the issue of insured value to the fore. "It is almost impossible for consumers to work out what their cover should be."

And she compares the insurance industry unfavourably with banks, which have developed innovative products for impoverished customers.

"Where are the basic insurance products like basic bank accounts?"

But Ms Guthrie saved her most caustic comments for the issue of social responsibility. While applauding the industry's stance on climate change she said the importance attached to the issue is directly related to the bottom line of insurers.

Fellow panellist John Evans, Head of Intermediary Business - Regional and Rural at CGU, detailed a long list of his company's efforts to participate in community life and become something more than a company that takes premiums and pays claims.

Ms Guthrie contends social responsibility should be broader than looking for sponsorship opportunities and is about more than building a brand.

She told delegates the insurance industry should put its own house in order before trying to mould consumer perceptions or behaviour.

"If we can't change consumers, perhaps the industry needs to change - or a bit of both."