Australia’s insurance industry should be congratulated for its efforts in returning to profitability – but it’s time to pass on some of that good fortune to consumers. That’s the message from new Australian Consumers’ Association (ACA) CEO Peter Kell, who told Sunrise Exchange News it’s “a little too convenient” for underwriters to say they don’t want the market to go back to the days of low premiums and low profits.

“When the various [tort] reforms were put together [by governments], consumers were promised savings on premiums, and we’ll be seeking that,” he said.

Mr Kell, who was formerly Executive Director of Consumer Protection at the Australian Securities and Investments Commission and therefore knows quite a lot about insurance, says the industry “should be given a bouquet” for its increased focus on professional standards and consumers. But while it “has come a long, long way in the past few years”, he says some companies still haven’t learnt all the lessons raised by HIH’s $5.3 billion collapse in 2001.

“Consumers continue to report a variation in service from company to company,” he said. “The gaps are quite large, and this is an issue the industry should work together to solve.”

Mr Kell – who identifies insurance as a “bread and butter” industry for the ACA – says niche classes like consumer credit insurance are a continual cause of concern for the association. While mainstream classes of insurance have greatly improved, issues affecting smaller classes of business – and smaller insurers – “just don’t go away”.

“These fringe providers go after some of the most vulnerable people in the community, and they’ve got to realise it’s not acceptable to do so,” he said. “Some small players are even selling people insurance where they’re not eligible to claim, for work and other circumstantial reasons.” 

Mr Kell says the ACA is eagerly anticipating the release of Treasury’s study of financial services guarantees. And the ACA also wants to see some action on HIH Royal Commissioner Justice Neville Owen’s recommendation to introduce a policyholder protection scheme.

“It would be highly undesirable to put a protection scheme on the backburner,” he said. “Consumers told the Wallis inquiry [in 1996] that a policyholder protection scheme was needed, and they were told to stop being silly because no Australian insurer would ever fail. The last few years have told a very different story.”

The ACA is also eager to see the draft of the new General Insurance Industry Code of Practice, which the Insurance Council has been expected for months to release for public consultation. Mr Kell indicated some wariness about the delays.

“The Insurance Council of Australia said it wanted to wait to see what effects the Financial Services Reform Act would have on the industry before releasing the new code. Well, now it’s here, so what are they waiting for?”

He says it’s also important the dispute resolution bodies, like Insurance Enquires and Complaints are consulted throughout the process. “The industry too often underestimates the importance of a properly functioning dispute resolution scheme,” he said. “The schemes can provide very useful information to the industry in terms of what’s working and what isn’t.”