The Insurance Council of Australia (ICA) says training standards for general insurance providers are suitable and the sector shouldn’t be swept up in demands for higher financial adviser education.

ICA says there’s no evidence of problems with advice on general insurance, classified as a Tier 2 product requiring Certificate III level training.

“The risks associated with a general insurance product are very different to other investment-based products such as superannuation, margin lending or funds management,” it says in a submission to a parliamentary inquiry into lifting financial services industry standards.

ICA also says the Tier 1 classification for personal sickness and accident (PSA) insurance – often included in packages for farmers, small businesses and tradespeople – is unnecessary and creates complications.

PSA should be reclassified as a Tier 2 product as it’s limited to annual contracts, doesn’t require medical assessment and premiums reflect the limited duration of benefits, it says.

“This would align PSA with all other general insurance products, encourage advice, while streamlining and reducing compliance costs.”

ICA says any moves to reclassify consumer credit insurance into the Tier 1 category would have significant commercial repercussions that could lead to a “no advice” model on the product.

“This would have a perverse outcome of reducing assistance available to consumers and have a detrimental impact on consumer understanding,” it says.

The council urges the inquiry to make a clear distinction between issues relevant to insurance brokers and advisers and those related to financial planners.