The Insurance Council of Australia (ICA) wants general insurance treated differently to the banking sector in proposed laws increasing financial crisis management regulatory powers.

The proposed legislative changes include giving the Australian Prudential Regulation Authority (APRA) power to take control of an insurer, particularly where it is part of a complex financial group or its distress poses a risk to the financial system or economy.

But ICA says if an insurer enters financial difficulty it is not susceptible to sudden collapse, as a bank would be, and there is time to take recovery action or manage a resolution in an orderly fashion.

The council is “not convinced there is a need to provide for statutory management of an insurer. A court should be able to respond with a sufficient speed in relation to matters of judicial management.”

It has also criticised the Government for allowing only a three-week consultation period on the legislation. The Government previously consulted on extending APRA’s powers in 2012, but action was put on hold while the Financial System Inquiry was completed.

“The limited consultation timeframe has materially constrained our ability to properly assess the implications of the proposals and provide in-depth comments on the draft legislation,” the submission says.

“The general insurance sector does not require the same regulatory approach as that applied to the banking sector, which is heavily influenced by the goal of promoting systemic stability.”