Insurers are working hard to improve public confidence in the industry, which suffers a “trust gap” that is magnified when natural disasters strike, Insurance Council of Australia (ICA) CEO Rob Whelan says.

Improving the disclosure regime and making insurance more affordable for lower-income consumers are among the many initiatives started in recent months.

The industry is also drawing on Big Data to improve mitigation and resilience in communities vulnerable to natural disasters.

“In this sector the trust gap has come as a consequence of expectations on what the industry can do and how it should perform,” Mr Whelan said.

“This is built on a lack of understanding of how policies work and how insurance can help.

“The industry has been working on improving this area for some time.

“I believe the industry is taking its social licence obligations seriously, and it is having an impact.”

He says it is unfair to suggest insurers are not fulfilling their obligations when the industry pays 98% of all claims.

“However, it is usually the more problematic claims of those least able to recover, or those with inadequate cover, whether inadvertent or through choice, that are used to demonstrate the industry’s failure to meet its perceived obligations,” Mr Whelan said.

“Here, the concept of social licence is often defined as the need for the industry to just pay up, regardless of the policy conditions, or to be more compassionate in the treatment of claims – which again means pay the claim.

“This is a far too narrow and opportunistic definition of what true social licence is.”