The Insurance Council of Australia (ICA) has launched a review of the insurance industry’s options to address insurance availability and affordability in order to improve the sector’s contribution to national economic recovery and growth.
The review, led by former insurance executive and regulator John Trowbridge in collaboration with economist Michael Blythe, aims to identify solutions to insurance problems that have been challenging high risk areas or sectors for over a decade. It will flag questions for policymakers, stakeholders, and the industry to consider.
“As has been recognised by the recent Royal Commission into National Natural Disaster Arrangements, the ACCC Northern Australia Insurance Inquiry, and Australian Small Business and Family Enterprise Ombudsman's report, some of these issues can be addressed with industry initiatives or regulatory reforms, but some may be beyond the ability of the private insurance industry to resolve on its own,” Trowbridge said.
ICA chief executive officer Andrew Hall highlighted that insurance must allow consumers and businesses to pursue their affairs confidently because they know they will receive financial support to recover from any insured risks.
“The private insurance market performs this risk transfer process successfully on the whole. However, the industry is keen to examine where it can do more to manage issues of affordability or availability,” Hall said. “In many of these cases, insurers themselves are also under pressure to provide a profitable product, so solutions are often difficult to determine.
“While changes in availability or affordability of insurance send a price signal about the risks that are present, we know that where there are acute issues we need to find ways forward so economic prosperity is not hindered or risk shifted back on those without the capacity to properly manage it. That is why the Insurance Council has engaged industry expert John Trowbridge and leading economist Michael Blythe to undertake this important review and recommend ways forward for the industry and policymakers.”