The Insurance Council of Australia (ICA) has set up a taskforce to help improve the presentation and communication of product disclosure statements.

Veteran insurance lawyer Michael Gill will chair the Effective Disclosure Taskforce, which will present its findings to the ICA board in November.

“The insurance industry, governments and consumer groups all perceive the
current disclosure regimen as being lengthy, often complex and not always helpful in ensuring consumers understand the product they are buying,” ICA CEO Rob Whelan said.

“Effective disclosure should help consumers choose products that are appropriate to their needs.”

The quality of consumer experiences will be the taskforce’s guiding principle as it considers guidance, sum-insured calculators and advice provided by insurers.

While it is mandatory for insurers to provide general disclosure statements and product disclosure statements to consumers buying insurance products, industry experts say the current system has failed to help people better understand what they are buying.

“I don’t think the product disclosure statement is a user-friendly document,” Consumer Action Law Centre Senior Policy Officer David Leermakers told insuranceNEWS.com.au.

“It is not particularly engaging. It puts a lot of people off, it’s a long and complex document.”

Mr Leermakers is on the seven-member taskforce and says his comments reflect his personal views.

“There is a role for disclosures,” he said. “I don’t want to do away with it, but it is simply not enough to design a product, hand it to the consumer with a wad of terms and conditions and consider that the consumer has accepted all the risk.

“A far more sensible approach is to make sure the product is safe and fair before they are sold.”

Mr Leermakers says any suggested amendments must first be tested to assess their effectiveness.

“I would love to think we can shorten and simplify the product disclosure statements but we cannot be certain that will create better outcomes for consumers until we test it in real conditions and see what happens,” he said.

“I hope the taskforce… will lead to at least one or two tangible outcomes that improve outcomes for consumers.”

The other committee members are Ravi Dutta (Behavioural Insights Team), Tracy Green (IAG), Chris Harnett (QBE), Ben Honan (Suncorp) and Gail Pearson (University of Sydney).