Kelly O’Dwyer, minister for revenue and financial services, has briefed the insurance industry on what to expect from a busy regulatory year ahead.
Speaking at the Insurance Council of Australia Annual Forum, O’Dwyer said that the industry can expect a busy 2018 from a government and regulatory perspective.
“There are many issues in front of us at the moment but we haven’t lost sight of the importance of insurance to consumers, their communities and the wider economy,” O’Dwyer said.
Calling the industry “crucial” to communities and the wider economy, O’Dwyer discussed a wide range of topics, from the current Royal Commission into the financial services sector to the Government’s response to the Northern Australian Insurance Premiums taskforce.
O’Dwyer noted that the Royal Commission has brought to light “concerns” surrounding delays in claims handling within the industry.
“Due to the overlap with the remit of the Royal Commission, the work being done by the Treasury to enhance ASIC’s oversight of insurance claims handling will now be considered pending the outcome of the Royal Commission,” O’Dwyer told attendees.
O’Dwyer added that the Government will continue its plan to apply unfair contract term laws to insurance policies – a move many in the industry disagree with. Addressing event delegates, O’Dwyer said: “I know that many of you here today have consistently advocated that there is no need to extend the unfair contract term provisions to insurance contracts, as you are of the view that there are already comprehensive consumer protections in place for insurance, such as the Duty of Utmost Good Faith provisions.
“Yet, many outside the insurance industry disagree. For example, the Australian Consumer Law Review said extending protections to insurance contracts will ‘address inconsistencies in the level of protection provided across all standard form contracts.’”
O’Dwyer also put the spotlight on add-on insurance, an area in which ASIC has handed down compensation of more than $120 million in recent months.
“That’s why the Government is consulting on draft legislation to give ASIC product intervention powers and to put design and distribution obligations in place,” O’Dwyer said.
“It is critical that these reforms — that of course resulted from the landmark Financial System Inquiry— enhance consumer protections and make sure that financial products are targeted and sold to consumers who might benefit from them.”
O’Dwyer also said that the Government accepts the findings of the Northern Australia Premium Taskforce that stressed the need for increased mitigation spending and further detailed the ACCC inquiry into the supply of residential building, contents and strata insurance in northern Australia.
“The advantage of having the ACCC conduct the inquiry is that they have compulsory information gathering powers to get information that other reviews have not been able to get,” O’Dwyer said.
“The inquiry is considering the competitiveness of markets, consumer access to information, regulatory issues and the key cost component for insurance pricing, especially catastrophe risk.”
The ACCC inquiry will issue its final report in November 2020.