The Australian Consumers Insurance Lobby (ACIL) has pushed back against claims from the Insurance Council of Australia (ICA), which argued that the regulatory load is adding up to $3.5 billion a year to consumers’ insurance costs and creating “compounding and unsustainable” operating expenses for insurers. ACIL contends that the industry’s focus on reducing regulation overlooks the fundamental reasons these rules were introduced.
“If insurers want to have a serious conversation about reducing regulation, the starting point has to be better conduct,” said Tyrone Shandiman (main picture), chairperson of ACIL.
On Friday, the ICA released The Cost of Regulatory Burden report that showed - for the first time according to the ICA – the “compounding and unsustainable” cost insurers face meeting a mounting number of regulations. Andrew Hall, the ICA’s CEO, struck a conciliatory tone. “Much regulatory cost is reasonable,” he said, because it protects consumers and ensures the stability of the insurance industry. “But the combined impact of 30,000 regulatory obligations is duplication, increased costs, and delays for insurance customers,” he said.
ACIL has pushed back against the report because it said the regulations are a response to the fact that the industry is not meeting expectations. “The complaints data and the evidence we continue to see through government inquiries, doesn’t reflect an industry that’s meeting community expectations,” said Shandiman to IB.
The ICA and many industry stakeholders have long supported self-regulation as a way to offset the need for what they see as excessively burdensome and sometimes unnecessary government-enforced regulations. Shandiman would have none of it.
“The reality is that self-regulation only works when it’s credible, and right now it’s not,” he said.
Shandiman described the Insurance Industry Code of Practice review as “stalled” and said key recommendations from the industry’s own inquiry have been ignored without explanation. “Until insurers can show that they’re genuinely committed to transparency and accountability, the case for winding back regulation simply doesn’t exist,” he said.
The ACIL chair pointed to ASIC’s Regulatory Guide 271. This rule requires insurers to record all “expressions of dissatisfaction”, not just formal complaints. The ICA identifies this rule as burdensome in one of the case studies in its report: “The expanded definition of a "complaint" in ASIC's Regulatory Guide 271 has created a significant administrative load for insurers with limited benefit for identifying systemic issues,” said the ICA’s analysis.
Shandiman is not convinced. “We’re still seeing widespread issues with delays and this reporting gives regulators visibility over problems that might otherwise go unseen,” he said.
The ACIL chair said this process can be refined but transparency and data are essential for regulators to ensure the market is working for consumers.
