The independent panel reviewing the general insurance code of practice is considering whether more clarity on mitigation measures and impacts on premiums is needed amid affordability concerns. 

Review panel Chair Helen Rowell says programs such as cyclone resilience retrofitting and a building app are helping consumers reduce risks, and transparency is important around how insurers might be taking mitigation actions into account in new and renewing policy premiums.

“While some insurers have committed to do this, there is clearly more work that’s needed for the consumers and other stakeholders to have both confidence and clarity regarding the impact of their risk mitigation actions on their insurance premiums,” she said. “We are thinking about whether and how the code might be able to address that.”  

Ms Rowell, a former deputy chair of the Australian Prudential Regulation Authority, nominated transparency when asked at the Actuaries Institute summit on Friday, about a key “takeaway”. 

“I think we need to demystify some of the black boxes and the information that’s given to consumers and actually help them understand what the risk that they’re exposed to is, how that’s being priced and what their policy covers, what it doesn’t,” she told an Actuaries Institute summit on Friday. 

Ms Rowell says traditional risk pooling concepts are being challenged, as the more that products are designed and priced to meet specific individual consumer risks and needs, the less tolerance there is for cross subsidisation, driving protection gaps. 

The issues require an understanding of where the boundaries of sustainable insurance are, the products that will support that, and where there might be opportunities for insurers to work with “other stakeholders like the government to find solutions”, she said. 

Ms Rowell told the summit that financial hardship and vulnerability are key focus areas for the code review panel given broader changes in approaches and in community standards since the previous review was completed. 

Allianz Australia EGM Consumer Shez Ford told the summit that proposals to extend standard definitions to more perils could go some way to helping reduce confusion and complexity for policyholders, but product design should also be a focus. 

“If we are adding complexity to how the product works, to make it fit, then we’re probably heading down the wrong path and we need to look for alternate solutions,” she said.  

Queensland Reconstruction Authority CEO Jake Ellwood told an earlier session that premium benefits can encourage people to take steps such as retrofitting homes with more resilient materials. 

“It’s hard in a time where people are fiscally constrained to make that decision to pay more to raise or retrofit, or as you’re designing a home to take particular measures,” he said. “If there is a reward in terms of insurance premiums, that would be a good thing.”