The Insurance Council of Australia (ICA) is undertaking its own review of affordability and availability issues following a number of other inquiries that have identified coverage problems for some consumers and businesses.

The review is being led by former insurance executive and regulator John Trowbridge, in collaboration with economist Michael Blythe. A consultation paper will be released next month and a final report is due mid-year.

“As our nation navigates the COVID economic recovery, it’s important to understand that nothing can happen without insurance providing essential coverage for insurable risks,” ICA CEO Andrew Hall said today.

“The private insurance market performs this risk transfer process successfully on the whole, however the industry is keen to examine where it can do more to manage issues of affordability or availability.”

Mr Hall says in many cases insurers themselves are under pressure to provide a profitable product, so solutions are often difficult to determine.

“While changes in availability of insurance send a price signal about the risks that are present, we know that where there are acute issues, we need to find ways forward so economic prosperity is not hindered or risk shifted back on those without the capacity to properly manage it,” he said.

The issues has been looked at recently by the Royal Commission into National Natural Disaster Arrangements, the Australian Competition and Consumer Commission Northern Australia Insurance Inquiry and the Australian Small Business and Family Enterprise Ombudsman.

Mr Trowbridge says while issues are well known, there has been a lack of agreement on potential solutions, and some may be beyond the ability of the industry to resolve on its own.

“The consultation paper will review various potential solutions and flag questions for policy makers and stakeholders and the industry to consider in order to move these important issues forward,” he said.

Terms of reference for the inquiry are:

• Examine the role of the private insurance market in promoting economic recovery and growth
  
  
• Identify insurance market segments and market situations where affordability and/or availability are seen to be important issues
  
  
• Explore which of those segments and situations can be ameliorated or rectified through initiatives taken by insurers, either individually or collectively
  
  
• Identify which segments and situations are not reasonably insurable in the context of community and government expectations of affordability and availability
  
  
• Identify principles and potential solutions which will overcome the current market shortcomings, so as to serve the community better without imposing obligations on insurers that they cannot meet, or that may cause them to withdraw from the market or to fail
  
  
• Consider how best to approach scenarios where insurance protections become unaffordable or unavailable due to market limitations
  
  
• Suggest initiatives that the industry and governments might take that would overcome market limitations, serve the insuring community better and support government policymaking in the interests of our society and the economy.