The Australian Consumers Insurance Lobby (ACIL) has expressed concerns about the Insurance Council of Australia’s (ICA) initial response to the General Insurance Code of Practice Independent Review. ACIL’s newly released report, Falling Short: Why the Industry’s Initial Response Fails to Deliver Meaningful Reform in the Code of Practice, highlights several key areas where it believes the ICA’s proposed reforms are insufficient in addressing critical consumer protection issues.
Key Concerns Raised by ACIL
ACIL’s report identifies several shortcomings in the ICA’s response:
Flood Inquiry Recommendations: The report points out that the ICA’s proposed changes do not include 49 recommendations from the Flood Inquiry, leaving gaps in consumer protection related to flood insurance.
Minimal Structural Changes: ACIL criticizes the ICA for making only cosmetic changes and avoiding more profound, systemic reforms that could address long-standing issues affecting policyholders.
Claims Handling Practices: The report claims that certain expert assessments are manipulated to minimize insurer payouts, which disadvantages policyholders.
ICA’s Position on Reform
In its response, the ICA stated that it supports most of the panel’s recommendations and is actively working on implementing improvements aimed at enhancing policyholder protections, streamlining claims processes, and increasing industry transparency. The ICA mentioned initiatives such as the development of standardized contract terms and bolstered support for vulnerable customers.
ACIL’s Call for Stronger Reforms
Despite the ICA’s claims of progress, ACIL’s chairperson Tyrone Shandiman criticized the industry’s response, describing it as a “predictable and concerning failure to address systemic issues.” He reaffirmed ACIL’s support for Opposition Leader Peter Dutton’s push for a more significant overhaul of the insurance sector. Shandiman emphasized that consumers deserve better protections and that ACIL is prepared to pursue the matter through public campaigns, political channels, and legal actions if the industry fails to act.
Calls for Delayed Approval
ACIL’s report urges the Australian Securities and Investments Commission (ASIC) to delay approving the revised Code of Practice until additional protections are included. The organization also encourages whistleblowers within the industry to come forward with information on potential misconduct.
ICA’s Response to Overhaul Suggestions
In response to calls for an overhaul of the insurance industry, ICA CEO Andrew Hall reiterated that insurance affordability is directly linked to risk management. He emphasized that reducing or eliminating risks through investments in resilience-enhancing infrastructure, better building standards, and land-use planning reforms would require significant collaboration between the industry and government to ensure long-term sustainability.
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