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Insurance Business | 24 Oct 2014, 08:26 AM Agree 0
Brokers have labelled plans for Federal Government to establish a state aggregator as “nothing short of madness”.
  • MD | 24 Oct 2014, 09:46 AM Agree 0
    The Government and some consumers forget you get what you pay for, and its about the cover. Our House is our biggest asset, yet why do consumers treat house insurance like a joke, have a look and the Ombudsmans stats, direct Insurers have the most complaints compared to Broker clients.
  • The Oracle | 24 Oct 2014, 09:52 AM Agree 0
    How disappointing that an otherwise competent finance minister should be so short-sighted. Every APRA registered insurer would justifiably be considering the setting up of off-shore entities. Turning to engineering assessments for strata properties. Just wait for the backlash when a plethora of sub standard construction practices are identified...
  • Muzzy | 24 Oct 2014, 09:53 AM Agree 0
    As the quotes in the article allude to, allowing foreign insurers into the market based on price is very dangerous. Compliance with regulations, FOS etc is a genuine cost to local insurers, which their foreign rivals don't have to bear. I don't see how this creates a level playing field.

    It may result in cheaper premiums for those clients who fortunately never need to claim but it will most likely also serve to dilute coverage for those that do need to call on their policy.
  • Karen | 24 Oct 2014, 09:53 AM Agree 0
    As emailed to Senator Mathias Cormann yesterday. I would encourage all insurers and brokers in Australia to do the same.

    Caveat Emptor to be the new norm within the Australian Insurance Market.

    For 30 years Australian Insurance Consumers have been protected by various laws, regulations and Industry Codes. Australian's have enjoyed extensive obligatory levels of cover and the surety of prudential regulation within our shores. Our stringent laws have lulled consumers into believing that all insurers and insurance covers are equal and secure...they are not.

    Today's announcement, by Finance Minister Mathias Cormann, to allow the use of Unauthorised Foreign Insurers into the Far North, will effectively destroy consumer protection measures taken for granted by property owners within our region, leaving them exposed and vulnerable should they choose to insure with an Unauthorised Foreign Insurer.

    Thank you to the Australian Government for "allowing licensed Brokers to sell policies from Unauthorised Foreign Insurers where they offer consumers a better price". What a furphy! Licensed Insurance Brokers are obligated under the Insurance Brokers Code of Practice and by law to act in the "Best Interest" of their clients and not make a recommendation based on price alone.

    We must ask....
    ..."Will this mean all current Australian prudential regulation and consumer protection legislation will be repealed?"
    ..."Will Bushfire areas also be able to tap into a direct global market?"
    ..."Will Unauthorised Foreign Insurers also subscribe to the Financial Ombudsman Service and be legally bound by their decisions?"

    Today's announcement, by the Finance Minister, changes nothing but the public perception that our insurance market is flawed or just not good enough.

    And finally, Who will be accountable when a savvy consumer screams "MISREPRESENTATION, OVERSEAS INSURER INSOLVENCY OR NOBODY TOLD ME THAT!". Who will pay when it all goes wrong? Will it be ASIC, the comparison website manager; or you and I as tax payers? Our government is broke; our domestic insurance market is over exposed and consumers are searching for utopia in their wallets without addressing the two biggest elephants in the room....
    1. RISK - by hook or by crook, we have chosen to live in perilous paradise.
    2. REGULATION - the average cost of Government Taxes, Duties and Indirect Compliance Costs equate to approximately 35% of an insurance premium in Australia.

    The Financial Services Industry is one of the largest employers within Australia. Today's announcement by Senator Cormann, should ensure this will no longer be the case.

    FNQ Buyers Beware!
  • Monty Sheridan | 24 Oct 2014, 10:17 AM Agree 0
    Karen - I'd take it one step closer to the truth..
    "Brokers beware..." As pointed out, the foreign market is only available via a licensed Australian broker. If the foreign insurer declines a claim, goes insolvent... who's the client going to sue, and lets face it, who are the courts going to side with? Consumer or Professional adviser...?
    I guess the success of this "off-shoring" is actually in the hands of brokers, not the politicians.
    Any broker that's uses these off-shore providers better have their PI updated! lol
  • Ageing Broker | 24 Oct 2014, 11:28 AM Agree 0
    So, if the government's proposed aggregator site includes Unauthorised Foreign Insurers UFI) they, the government, will have to issue a PDS stating that the UFI is not regulated by Australian government law just as brokers currently have to do.
    It raises the next question: if a UFI fails to honour its contractual obligations (i.e. pay a claim) the insured's recourse can only be to sue the broker (or perhaps the government aggregator) or try to sue the UFI in its country of domicile.
    Mr Cormann you are opening up a Pandora's box which not even a 'girlie man' would want to sort out.
  • rob | 24 Oct 2014, 12:54 PM Agree 0
    i seem to recall that the government of the day via APRA and ASIC were at the helm when the ship ran into a huge iceberg - HIH
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