The ICA has called for the definition of “insurance business” to be widened under the Insurance Act so that such organisations as medical defence organisations, self-insurers and other schemes covering professionals are embraced by prudential requirements.

In its 120-page submission to the HIH Royal Commission, ICA said the effects of the recent regulatory reforms will take some time to be felt. The council also wants APRA to be the prime prudential regulator. “The states and territories should relinquish all such powers over their statutory schemes such as CTP and workers’ compensation,” the submission said.

The insurers also want a scheme to protect policyholders from another insurer collapse, although ICA said the reforms have made such a scenario unlikely. But Australia should follow the lead of other OECD countries by establishing a Policy Protection Scheme.

ICA proposes that the scheme would be run by insurers as a non-profit company, something along the same lines as the current HIH Claims Support scheme.

Executive Director Alan Mason said the specific design of the scheme would have to be debated and should only be introduced after regulatory and taxation reforms relating to the general insurance industry occur.

The submission also says fire services levies in NSW, Victoria and Tasmania should be abolished and replaced with “a more equitable method of funding emergency services” which distributes the cost across all property owners.

The insurers also want stamp duty in all states to be removed or at least phased out. “The heavy tax burden on insurance products reduces the affordability of insurance and should be removed,” Mr Mason said. “Removal of state taxes would encourage the purchase of insurance and create capacity for funding a PPS scheme.”