Victorian Fire Services Levy Monitor Allan Fels has launched a stinging attack on the insurance industry, urging it to become more competitive and transparent.

The former Australian Competition and Consumer Commission head has used a discussion paper to criticise the “absence of effective competition” in the industry.

Professor Fels’ says the paper – Enhancing the Consumer Experience of Home Insurance: Shining a Light into the Black Box – is intended as “a challenge to the industry”.

“Our report is based on the Victorian experience but we’d like to see change at the national level,” he told insuranceNEWS.com.au. “The issues are Australia-wide.”

The paper calls for an overhaul of the way insurance companies provide information on premiums.

It accuses insurers of lacking transparency and of failing to explain to consumers how prices are set, what they are covered for and how risk settings are determined.

“If customers are not informed, that will be to the detriment of competition,” Professor Fels told insuranceNEWS.com.au.

“Even if there are numerous suppliers, competition won’t work if consumers are not informed.”

Professor Fels also wants mandatory short-form product disclosure statements introduced.

Arguing that information on what policies cover is “often buried” in statements “typically more than 50 pages long”, he is particularly critical of disparity in insurers’ quotes.

He says his office found examples of householders receiving quotes that varied by as much as 60%.

“In a well-informed market such price differences for the identical product would not exist.”

He hopes his discussion paper will provide a catalyst for change in the insurance industry.

“We’d like to see that change come from the industry rather than from government. However, if change doesn’t happen, I would not be surprised if the issue was… picked up by the appropriate regulator.”

Professor Fels is tasked with overseeing the abolition of the fire services levy in Victoria, which was replaced last year by a property charge.