The Federal Government’s much-anticipated Financial Systems Inquiry has rung some alarm bells in the insurance industry, with discussion over giving aggregator websites greater access to insurance pricing data.
FSI Chairman David Murray yesterday released an interim report and called for further input on whether aggregator sites should have greater access to insurers’ pricing models, to help customers better compare different products.
NIBA CEO Dallas Booth says this is a concern.
“NIBA has been pointing out for some time the insurance process requires the assessment of risk, the provision of cover that responds to those risks, and the cost of that cover,” he says.
“Aggregator sites address one issue only – price, and give little or no information to consumers as to appropriateness or usefulness of the cover they are buying.”
Insurance Council of Australia CEO Rob Whelan says even the FSI report notes that aggregators can create to much of a focus on price.
“In the ICA’s view, consumers are much better off being helped to understand their risks, and then to identify the insurance products with the features that best satisfy those requirements,” he says.
The push comes not long after Victorian Fire Services Levy Monitor Professor Allan Fels called for greater transparency in premium pricing models.
However, the insurance industry has welcomed the FSI report’s findings on the lack of competition in statutory schemes such as workers compensation and compulsory third party insurance.
Booth says this was a key part of its submission to the FSI and was pleased it was being noted.
“NIBA will continue to argue the benefits for clients who have access to a competitive insurance market,” he says.
“Finally, there is substantial discussion in the interim report about the role and powers of ASIC.
“There are some major questions being raised, such as what do you do if product disclosure does not work. This is an important challenge, and NIBA will continue to argue the need for consumers to have access to quality, professional advice on risk and insurance matters.”
FSI Chairman David Murray has called for a second round of submissions on the issues raised by the interim report. They are due by 26 August.