Solving the insurance industry’s current woes won’t be easy, says ICA President Raymond Jones. Speaking at the ICA annual dinner in Sydney last week, he warned: “If the risks are not reduced, if the cost of claims is not reduced, if there is not more predictability and stability in claims patterns, the current problems of the industry will not be resolved.”

The industry’s present parcel of issues – public liability, builders’ warranty and medical indemnity – are not just insurance problems, he told an audience which included senior politicians and industry figures. To see the situation as an industry-only problem would be a gross over-simplification.

There are a lot of issues on the ICA agenda at the moment, and Mr Jones had to leave out such juicy items as tax and HIH in his short address. However, he did call for uniform legal reform across the Commonwealth, states and territories.

With Assistant Treasurer Helen Coonan listening intently, Mr Jones commended all the ministers who took part in the public liability summit in late March.

In her address to the dinner, Senator Coonan failed to mention the issue of liability at all. Her speech, titled “Safety, Soundness and Sustainability”, concentrated instead on spruiking the APRA reforms to be introduced on July 1.

In relation to capital requirements, she said cheap insurance “is not insurance at all if a company can’t pay out the claims when they arise”, she said. “The interests of consumers are not served by enabling poorly capitalised entities to operate in the market.

“The new, risk based capital adequacy standard takes this into account by requiring insurers operating in long-tail classes to hold more capital.”

On a positive note, Senator Coonan offered the soothing opinion that most insurers are already operating their businesses on a sound basis sufficient to enable compliance with the new requirements.