NIBA and the ICA have welcomed the ‘Son of Wallis’ inquiry into Australia’s financial system as an opportunity to examine risk and risk management, and have signalled their readiness to participate.
The inquiry comes 16 years after Stan Wallis AC led a similar inquiry. Last week the Australian Government revealed it had appointed David Murray AO to head the inquiry.
The review will make recommendations to foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness. The Government says this should result in less costs, lower fees and greater efficiency in the allocation of capital.
Draft Terms of Reference for the inquiry are being released for a two week consultation period. Following feedback, final terms of reference and the final composition of the inquiry will be announced in mid-December, with the inquiry to publish an interim report by September 2014 and deliver a final report by November 2014.
NIBA CEO Dallas Booth told Insurance Business he has started dialogue with the NIBA board of directors, and that the association would carefully consider the Terms of Reference before putting forward its views.
“This is a once-in-a-16-year opportunity to review how the financial services and to put forward comments. It’s quite a broad scope and that is appropriate.”
Booth added that he is “personally interested” in the extent to which it the inquiry should look into the financing of risk.
“Australia is very exposed to risks associated with natural catastrophes and other activities. The financing of those risks and the governance can be very challenging. The insurance community has done a fantastic job but there broader issues – financing those risks can be difficult in terms of risk and location.”
The ICA CEO Rob Whelan added that the inquiry provides the opportunity to examine policy measures that support access and choice in general insurance and risk management in the broader community, including the provision of products and instruments that satisfy the needs of the future and emerging risks.
Whelan also said there would be scope to review the long-term nature of general insurance markets and the growing role of technology in risk pricing and in narrowing information asymmetry; and consider the appropriate balance between stability and competition in general insurance markets and their impacts on insurance premiums.
As part of the Government’s broader deregulation agenda, it intends to reduce the regulatory burden on the financial services sector wherever the benefits to competition, efficiency, market stability or consumer protection are questionable.
Murray will head a committee of four eminent Australians drawn from the finance, business and academic sectors.
The inquiry’s scope will reflect the Government’s desire for a ‘root and branch’ examination of the nation’s financial system.
Among its considerations, the inquiry will be asked to report on:
- How the financial system can more efficiently allocate Australian sourced capital to minimise our exposure to volatility in global capital markets;
- How it can best balance competition, innovation and efficiency, with stability and consumer protection;
- The role and impact of new technologies, market innovations and changing consumer preferences; and
- International integration, including international financial regulation.
In its deliberations, the committee will draw on the expertise of a special external council comprising five international business people to specifically advise on matters relating to international competitiveness and offshore regulatory frameworks and related issues.
Submissions are requested by Thursday 5 December, 2013.
To make a submission, click here: