The Federal Opposition believes keeping the insurance industry under state and federal administration will lead to increased compliance costs and says state taxes must go.

Financial Services spokesman Chris Pearce – the former Parliamentary Secretary to the Treasurer in the last Howard government – told the ICA Regulatory Update seminar last week a system where insurance is solely regulated by APRA will no longer require state and territory involvement.

He says while insurers are in good shape partly due to regulation, there will always be the need for improvements and he believes there is an argument for some targeted reform.

“When examining the process of credit and financial reform currently being undertaken by the Government, why is it that insurance has been excluded from the process?” he said. “In recent years, state governments have displayed their unabashed desire to raise revenue through insurance taxes.”

Also speaking at the seminar, Federal Superannuation Minister Nick Sherry said the Government is doing its best to ensure the industry survives the global financial crisis, including introducing the Financial Claims Scheme.

It has also introduced measures to enhance the ability of regulators in the event of a failed insurer, and conducted a number of changes to the draft bill in the review of the Insurance Contracts Act.