The Insurance Council of Australia (ICA) has warned that unnecessary regulatory complexity increases the cost of doing business, hinders innovation and disproportionately impacts smaller market participants and new entrants.

ICA, in a submission to a Parliamentary inquiry, says complexity can drive up premiums and affect affordability and existing Regulatory Impact Analysis doesn’t go far enough.

“We note that it is not common for consumer testing to occur even for reforms which will make significant changes to consumer experience,” it says. “We also note that the process does not consider transition or implementation costs for business as it does for government and often has limited industry consultation, if any.”

The House of Representatives Standing Committee on Economics is holding an inquiry into promoting economic dynamism, competition and business formation. More than 30 submissions have been lodged.

ICA’s submission also reiterates a call for a financial regulators forum that could assist with planning and preparation by providing a pipeline of upcoming consultations and changes.

It suggests small improvements can be made in some areas ahead of more substantial changes that require extensive reviews.

“While considering larger changes, the Government could explore tweaks within the existing framework,” it says.

“For example, facilitating the use of shorter and more tailored disclosure documents by insurers, reducing the regulatory and compliance costs around providing advice, ensuring policy changes are technology neutral and support consumer preferences and more clearly tailor the consumer protection regime to specific products.”

The Business Council of Co-operatives and Mutuals submission calls for reforms to reflect that sector’s contribution and benefits, and argues that demutualisation over decades has reduced the diversity of many industry structures.

“The Australian insurance industry is a good example of this and has suffered a major loss of diversity through demutualisation, with many former mutuals now part of large merged insurance groups,” it says.

The group says policies should encourage the development of co-operatives and mutual enterprises (CME) in areas where they have an important role to play or provide services not otherwise provided.

Policies should also support capital access and retention in CMEs, regulate them on equal terms, and ensure their registration is as rapid, simple and affordable as possible, it says.