NIBA CEO Dallas Booth
and several market observers have expressed concerns over the launch of a new intiative, headed up by former NRMA boss David Issa, which aims to get thousands of Australians to sign up to get a group discount on home and contents insurance.
Booth told Insurance Business
that not enough information about the venture has been disclosed and that the initiative seems to be wrongly but heavily focused on price.
“It appears that this is a commercial venture by News Limited and others so we should be very clear about what this is,” he told Insurance Business
. “There have been some disclosures made but it would be nice to know the nature of this business, what exactly it is doing and what information it will provide to the customer. Will it provide general insurance advice or personal lines advice? And does it have a licence? NIBA is very concerned about any proposition being provided to the broader community which presents to the consumer that price is the most critical thing.”
Booth said the risk the customer carries, the cover available in the marketplace and price all have been be taken into consideration when finding cover.
“These things need to be matched for people to have good insurance cover. To put forward the suggestion – and implicitly imply - that all insurance policies are the same and provide the same cover and that the only thing to worry about is price is not correct.
Asked if NIBA would raise this issue the relevant authorities, Booth said: “We are talking to ASIC
reasonably regularly and to authorities like the Federal Treasury. Regulators are concerned that the information disclosure process to consumers is not working as well as it should be.”
Broker advocate Kate Fairley echoed Booth’s concerns. “This is just a continuation of advice being delivered by unqualified individuals claiming to be experts. They have no business promoting such a scheme and further encouraging consumers to focus on the price of insurance rather than the quality of the product they’re receiving.”
Fairley also queried the commission One Big Switch could receive as a result of placing business with an insurer. “I’d like to know how much commission is being earned from the deal, if they’re looking at an average base premium of $1,000 for 25,000 policies on a commission of 20% split among the interested parties that’s $5m, I’m certain consumers wouldn’t be too impressed to find that out."
She also called for APRA
’s industry statistics to show the margins between premiums charged and claims paid. “Then perhaps consumers will appreciate that they are not being overcharged by insurers, they are simply having to wear the cost of an increase in natural disasters globally.”
Readers were up in arms at the campaign. One commentator, The West Australian Perspective, accused the campaign of “spruiking” and said Issa should “hang his head in shame”.
He added: “At the end of the day this is just another example of the smoke and mirrors that people use to flog something to the average uninformed consumer who is only interested in price, not cover.”
‘Suspicious’ queried: “Surely no insurer would undercut a product offering it is already providing to its brokers, banks or its clients...considering the whole motivation focuses on price.”
‘Scott’ backed the idea, explaining that it uses the same logic as groups like Steadfast.
“And in fairness, home insurance costs really have gone up - whether you're in a "safe" area or a "danger" area,” he pointed out.
One Big Switch aims to register 25,000 householders interested in group discounts on home and contents insurance and use their combined buying power to negotiate an offer from a provider. The initiative is a joint campaign between MoneySavingHQ, News Corp and One Big Switch.
requested to speak with Issa about the concerns raised. The request was declined.