Large insurers are paying up to $60 million a year to comply with regulatory measures imposed by the financial services watchdogs, according to the Insurance Council of Australia (ICA).

It says the cost of meeting a range of obligations to such organisations as the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) is too great.

ICA wants the Federal Government to introduce cost-benefit testing to see whether the cost of laws such as the Financial Services Reform Act can be justified by benefits for consumers.

Deputy CEO Philip Maguire told a regulatory update seminar in Melbourne last week that such testing can only occur if the industry develops better data collection models.

“The industry doesn’t have as good data as it should have,” he said. “That’s certainly something we’re working on at ICA.”

ICA also wants a post-implementation review to be conducted two years after the introduction of regulations.

Mr Maguire says medium-size insurers are paying $5.5 million to $7.4 million a year for compliance, and smaller insurers spend about $5 million.

“For smaller insurers that is quite a disproportionate amount,” he said.

The costs associated with regulation mean the industry is “spending more time looking in the rearview mirror than at the road ahead”.

He has a point. Industry research shows regulation dominates 10-25% of senior management and board time. It takes longer for companies to develop and implement product offerings.

And Mr Maguire says overlapping in the regulatory powers of ASIC and APRA is adding to the burden. ICA believes there should be one regulator – APRA.

But ASIC Director Policy and Research Regulation Mark Adams told the seminar the industry should not lose sight of the benefits of the FSRA, such as the industry dealing with one set of laws and a harmonised approach to regulation.

“These may not be things we’re feeling today, but I believe we will in the future,” he said. “I am looking forward to a time when these regulations are second nature.”