The Financial System Inquiry’s (FSI) final report has gained broad support from the insurance industry.

Suncorp Personal Insurance CEO Mark Milliner says it has struck the right balance in singling out areas where more can be done to improve standards.

“The FSI rightly identified areas to prioritise to bolster confidence and trust in the industry,” Mr Milliner told insuranceNEWS.com.au. “And it was pleasing to see the important message of greater mitigation needed to protect our communities and assist with insurance affordability.”

He says the inquiry, led by former banker David Murray, “appears to have hit upon the major issues facing the industry and the community”.

The report’s recommendation that high premiums in disaster-prone areas be addressed via mitigation rather than government intervention has Suncorp’s backing.

“The FSI joins a growing chorus of government-commissioned inquiries and investigations calling for increased investment in mitigation,” Mr Milliner said. “It follows others including the Productivity Commission’s draft report [on natural disaster funding] and the Government Actuary report on north Queensland.

“They all back the industry’s risk-based approach to pricing and they all back mitigation as the most effective way to improve affordability.”

National Insurance Brokers Association CEO Dallas Booth says the FSI has produced a “good” report, but he would prefer a more active government approach to keep premiums affordable.

“The only way domestic insurance is going to remain affordable is if all levels of government take responsibility for managing the cost of natural disasters,” he told insuranceNEWS.com.au.

Both the association and Suncorp back the report’s recommendation for improved consumer guidance – including tools and calculators – and disclosure.

“I think it’s appropriate that the initial responsibility is placed on the financial system and the industry to explain their products to their customers,” Mr Booth said. “So insurance companies and also people selling products directly to customers… the onus is on them to explain the products properly and carefully.”

Mr Milliner agrees the industry has a role to play in raising consumer understanding of complex financial products.

“The complexity of financial products has created a system where poor experiences across the financial service system tarnish all sectors,” Mr Milliner said. “Disclosure as a regulatory and practical mechanism is fractured and we must all work together to fix it.”