The Australian Prudential Regulation Authority (APRA) has urged insurers to “take ownership” of the raft of challenges facing the industry, saying the actions they take are key to the future of their sector. 

Executive Director of Insurance Sean Carmody says the industry’s future hinges on its ability to address a range of “tough” questions such as insurance affordability, making their products fit-for-purpose and future-fit for Australians as extreme weather events intensify and addressing the protection gap. 

He says in some areas the first steps have already started. These include the collective work on risk mitigation including the Federal Government’s Disaster Ready Fund and creation of the National Emergency Management Agency. 

“But there are also actions that insurers can take themselves to help confront these challenges and to shape the future of the industry. It is time to make a difference,” Mr Carmody said in a speech last Friday at a conference in Sydney. 

“I encourage all insurers to take ownership of these challenges and to find opportunities to make a difference. With the actions we take today, we are writing the industry’s future.” 

He lists transparency as another area that demands action from the industry. Transparency means insurers are clear with consumers on what is and is not covered by a policy; that factors that drive premiums; and the type of mitigation actions by policyholders that will or will not reduce premiums. 

“Increasing transparency will not always feel comfortable … no one wants to tell someone they have just bought a house in a high flood risk zone. But speaking up and finding a way to be transparent about risk will help to deliver solutions,” Mr Carmody said. 

“A lack of transparency erodes trust, which undermines the effectiveness of communication. Over time, an investment in greater transparency can help to build trust … transparency is critical to improving a range of consumer outcomes. 

“I call on insurers to reflect on my challenge to increase transparency. I believe that a more transparent industry is a more trusted industry. Transparency will help build a more resilient community.”