ACCC’s northern Australia insurance inquiry slammed for examining ‘flawed’ options

ACCC’s northern Australia insurance inquiry slammed for examining ‘flawed’ options | Insurance Business

ACCC’s northern Australia insurance inquiry slammed for examining ‘flawed’ options

The Insurance Council of Australia (ICA) has slammed the Australian Competition and Consumer Commission’s (ACCC) Northern Australia insurance inquiry for examining “flawed ideas” that have already been found by previous inquiries to be “unviable and too expensive.”

The competition watchdog released its second update report, where it confirmed that higher costs and heavy losses incurred due to natural disasters resulted in higher-than-average premiums in northern Australia.

Read more:  Report highlights premium disparity in northern Australia

ICA CEO Rob Whelan said the industry is “disappointed” over ACCC’s focus on government-backed reinsurance pool, and mutual and direct subsidies – options that “have been tried in other countries and have failed to address the fundamental issue of reducing the risks through better planning, building, and mitigation.”

“Insurance in Northern Australia should not be subsidised by the rest of the nation; this would be unfair and unsustainable,” Whelan said.

Another key recommendation that failed to impress ICA was the creation of a national home insurance comparison website.

“Insurers do not support a national price comparison website for home insurance because it will not deliver useful information, since consumers in other parts of the country do not face the same level of risks as those who live in the north,” Whelan said. “A comparison website, run by ASIC, already provides premium comparisons for householders in northern Australia. The insurance industry would have preferred the ACCC offer practical recommendations that address the key drivers of pricing and availability of insurance in northern Australia – the high risk and impact of natural disasters (in particular cyclones and floods), high costs of materials and trades, inadequate building controls, and poor-quality building stock.”

On the other hand, Whelan said the industry continues to support ACCC’s recommendation to abolish state stamp duties on insurance, though he noted that “no progress has been made” on the proposal.

“Insurers also support the ACCC view that mitigation can improve affordability,” Whelan said. “Again, little progress has been made despite the Productivity Commission recommending the federal government invest at least $200 million a year in permanent mitigation and resilience measures, to be matched by state and territory governments.