Insurance customers have complained to the competition regulator about paying premiums for services they can no longer access due to COVID-19 restrictions.

While the complaints relate to the entire insurance sector, the Australian Competition and Consumer Commission (ACCC) also singled out as an example complaints from brides and grooms whose general insurance cancellation cover does not respond due to pandemic exclusions.

Last week ACCC chairman Rod Sims told 70 CEOs and senior executives from a range of companies across Australasia that insurers should “provide remedies” in cases where consumers cannot access full services due to COVID-19 restrictions, such as dental and optical.

He also outlined how the ACCC has moved quickly to reprioritise its work and direct resources towards delivering on issues stemming from the extraordinary economic disruption caused by COVID-19.

“Insurers have a critical role to play in supporting Australian households, businesses and the broader economy during this period of significant disruption caused by COVID-19,” Mr Sims said.

His comments came as the Australian Prudential Regulation Authority (APRA) suspended new insurance permits due to the economic turmoil created by the COVID-19 pandemic.

APRA has written to applicants for new insurance, superannuation and banking licences to advise it is temporarily suspending the granting of new permits for at least six months.

“Experience has shown that it is challenging for new entrants to succeed even under normal economic conditions, which is why APRA does not consider it prudent to license APRA-regulated entities at this time,” it said.

“These institutions are subject to higher standards than many sectors of the economy. This includes higher entry standards.”

APRA also recommended insurers limit their discretionary capital distribution, including deferral or “prudent reductions” in dividends.

Chairman Wayne Byres wrote to all authorised deposit-taking institutions (ADIs) and general insurers, life companies and private health insurers urging that they use capital buffers and maintain capacity to continue to lend and underwrite insurance.

Mr Byres says that during the next couple of months insurers should “give due consideration to plausible downside scenarios”.

Last month APRA allowed insurers to use capital buffers where needed to support the ongoing supply of credit to the Australian economy.

APRA also urged boards to “appropriately limit” executive cash bonuses.