It’s taken them a long time to work together so closely, so it was no surprise last week when Insurance Council of Australia (ICA) President Michael Hawker called for the interaction between governments and the insurance industry to continue to ensure tort reforms don’t lose their bite.

Speaking at ICA’s annual dinner in Sydney last week, the IAG CEO said insurance is a core part of the nation’s social and economic infrastructure.

“We don’t control the risk that we manage, all we do is price it,” he said. “We are required to price it accurately, but governments need to help manage that risk and we need to ensure that it stays very much on governments’ agenda for policy formulation.”

Mr Hawker says government reforms need to be closely monitored. “It only takes two or three years before previous reforms no longer have the same impact that they had when initially implemented.”

And he acknowledged the general insurance industry is in a very healthy position after many years of poor profitability, enabling it to provide security to the community and strength to the economy.   

He outlined six reasons for this improvement: cost reductions through significant industry consolidation, disciplined underwriting brought about by stronger prudential regulation and scarcity of capital, dry weather, strong investment markets, a strong economy and tort law reform.   

Addressing the “misconception” that insurers’ current profits are a result of tort reforms, Mr Hawker told his audience of more than 400 that liability “still only represents 8% of insurers’ total business”.

And he outlined ICA’s priorities for the coming year: the launch of the new, improved General Insurance Code of Practice; better data collection to aid policymaking decisions; finding a way to provide flood cover; and community education about the importance of insurance.