Never before have there been so many inquiries into the insurance industry as there have been in the past two years. Combined with this we have a Federal Government which, despite many and varied distractions over that same period, has been very focussed on the industry and implementing reforms based on recommendations contained in these reports.
On Monday 27 February 2012, the House Of Representatives Standing Committee On Social Policy And Legal Affairs delivered its report “Volume 1: The Operation Of The Insurance Industry During Disaster Events”.
The Committee was charged with inquiring into the operation of the insurance industry during disaster events. It received submissions from 79 individuals and organisations, 700 responses to an online survey and travelled to areas affected by natural disasters where it held 18 public hearings and 5 site inspections.
The report can be found at www.aph.gov.au.
The Committee made the following recommendations:
- Legislation should be enacted obliging general insurers to offer an insurance policy that conforms to Standard Cover, including flood cover and full replacement in the event of total loss.
- Legislation should be enacted requiring general insurers to make it clear to policy holders where a policy deviates from Standard Cover.
- The Insurance Contracts Amendments Bill 2011 should be enacted.
- Legislation should be enacted to remove the exemption of general insurers from unfair contract terms laws.
- The General Insurance Code of Practice should be amended significantly, to ensure that consumers are provided with more information on the claims handling process and to ensure that timeframes and standards are adhered to during disaster events.
- The Australian Securities And Investments Commission should be empowered to publicly name and shame insurers that breach the Code of Practice.
- Legislation should be enacted to make a breach of the duty of utmost good faith a breach of the Insurance Contracts Act, thereby empowering the Australian Securities and Investments Commission to regulate insurance claims handling.
- Legislation should be enacted to make the General Insurance Code of Practice compulsory for all general insurers.
- Regulations should be amended to oblige general insurers to provide clear and comprehensive information about both internal and external dispute resolution processes to policy holders at the time of claim lodgement, and to prohibit multi-tiered models of internal dispute resolution.
- Australian Government funding should be allocated to the Insurance Law Service so that it can mobilise temporary offices in areas of need following natural disasters.
- Funding from the Australian Government and the insurance industry should be allocated to the establishment of a consumer advisory position with the Financial Services Ombudsmen.
- The Australian Government should investigate ways to reduce the cost of calling 1300 numbers from mobile telephones in areas of natural disasters.
- A joint industry Government action group should be established immediately to address the rising costs of potential market failure of insurance premiums across Australia.