IAG supports more competition in state-based statutory insurance schemes and opposes sharing information with comparison websites.

In its response to the Financial System Inquiry’s interim report, the country’s largest insurer says state-owned compulsory third party and workers’ compensation schemes would gain “significant benefits” from private competitive underwriting.

Resource allocation efficiency, innovation and reduced prices are among potential advantages while Australian Prudential Regulation Authority rules ensure a high level of governance and financial stability, the submission says.

“Private insurers reward improved safety and care of injured workers and motorists with affordable premiums,” IAG says.

The submission reiterates IAG’s objections to co-operating with price comparison websites, pointing to recent UK Financial Conduct Authority concerns. It also opposes allowing aggregators to use automated processes to gain quotes from general insurance sites.

“Regulatory intervention compelling insurers to participate in price comparison websites would impose a substantial cost to the industry, particularly if insurers were required to update their information systems to enable access by live-pricing aggregators.”

IAG says comparison websites could be given an unjustified advantage over other intermediaries and the insurers themselves.

The submission also looks at underinsurance and says governments should take more responsibility for educating communities on new building laws and regulations that boost costs.

IAG says barriers to using total replacement policies – which has been suggested by consumer advocates – include a move away from the policies by reinsurers.

“While in theory total replacement cover may be desirable, there are substantial practical barriers to insurers providing this coverage, as well as the associated affordability issues that arise,” it says.

IAG supports investment in risk mitigation and resilience measures as the most effective way of reducing premiums in natural hazard risk areas.