The Insurance Council of Australia has voiced its concerns with the federal government’s plans to allow unauthorised foreign insurers easier access to the Australian market following North Queensland reforms.
It was announced last week that the federal government would set-up an online aggregator to allow consumers to compare insurance policies and to allow brokers to sell insurance policies from foreign insurers, according to Insurance Business.
ICA acting CEO Karl Sullivan voiced concerns about the entrance of foreign insurers into the Australian market, saying, “Existing licensed insurers operate under some of the tightest regulations of any industry sector, yet unauthorised foreign insurers may not be held to the same legal, prudential and capital requirements, nor the same consumer laws and remedies. The industry is concerned consumers who buy a product from a UFI under these new guidelines may not be able to rely on that company to deliver on its promise if the consumer needs to make a claim.”
Brokers in Queensland are also worried by the changes set to come into force in March 2015.
Mr Sullivan stressed the dangers over a price-reliant system, saying, “As ASIC and other agencies and organisations have pointed out, buying a product on price alone may result in the consumer not having cover for the risks they face. Buying a product should first focus on its features and benefits “This is especially important in North Queensland, which is one of Australia’s most exposed regions to natural disasters.”
The proposed engineering assessment for all strata-title properties in the region was praised by the ICA as they have developed a comprehensive strata building inspection scheme alongside James Cook University that has been made available for government access and implementation.
Brokers have criticised federal government plans to establish a North Queensland aggregator for insurance and its move to clarify that brokers can sell policies from foreign insurers, “short-sighted” and “nothing short of madness”.
They also panned the plans for demonstrating a “lack of respect” for local insurers and creating new problems for the consumer, ASIC and the ACCC. David Coe, managing director of Queensland-based North West Insurance, condemned the initiatives as a move that is “nothing short of madness”.
He told Insurance Business, “It brings in all the changes to be regulated, trained and meet certain requirements and yet now they are looking at allowing brokers to use the authorised insurers market.”
Another Queensland broker, Robert Cooper, director of Cooper Professional Risks, is also sceptical of the plans. He said an aggregator will do nothing to bring prices down. He criticised the government for turning the issue of premiums into a political one in an industry that “is not readily held in high-esteem by the community” and “using taxpayers’ money for a pointless aggregator site that does not create competition”.
“Not being licenced for the Australian market basically means the Financial Ombudsman Service is not available for the consumer if they have a problem with a claim.”