The Insurance Council of Australia (ICA) has rejected NSW Emergency Services Levy Insurance Monitor Allan Fels’ latest claim that premium discounts are a “deceptive loyalty tax” insurers employ to attract new customers.

Professor Fels says, from today, all home and contents policy renewal notices in NSW must detail the previous year’s premium.

He says the move, which also applies to motor, personal and small business renewals, will raise consumer awareness of pricing.

“This loyalty tax occurs when discounts are offered to attract new customers but premiums are increased at the first and subsequent renewals,” Professor Fels said last week.

“This practice, in my opinion, is deceptive because customers aren’t told.

“If the increase is revealed to customers, as our regulation will require in NSW, they are likely to question the increase, to inhibit the increases, and to shop around.”

His claims were swiftly rebuked by ICA, which rejects the long-time industry critic’s belief insurers impose the “tax” by not telling customers what they paid the previous year.

ICA told insuranceNEWS.com.au the NSW rule pre-empts national action on the issue through its upcoming code of practice, and that discounts for new customers “is competition in action”.

Insurers across Australia have already committed to including the previous year’s premium on renewals for home and contents and motor vehicle insurance “as part of the revised industry code, which is reaching finalisation”, an ICA spokesman said. “Several [insurers] already provide this comparison, ahead of the July 1 implementation for NSW.”

ICA suggests Professor Fels should confine his comments to his job, which is overseeing insurers’ actions during the aborted removal of the state’s emergency services levy.

It says his concerns “should focus on removal of the unfair and inequitable emergency services levy”.