The Insurance Council of Australia (ICA) has offered full support for policy reforms that may end the monopoly held by state governments over mandatory insurances in the wake of competition reviews.
The ICA has endorsed the privatisation of statutory insurances following news of federal government’s support for the Harper Competition Policy Review, which outlines significant reforms to Australia’s competition policy framework.
ICA CEO Rob Whelan says the territory and state government monopoly over Australia’s mandatory insurance schemes is contrary to the principles of National Competition Policy.
“Ten years ago, the Productivity Commission report on National Competition Policy Reforms described government monopolies in statutory insurance as ‘unfinished business’,” Whelan says.
“The ICA calls on governments with monopoly schemes to consider the benefits of competitive markets for workers’ compensation and motor accidents insurance.
“If governments wish to be an insurer in these schemes, the principle of competitive neutrality provides that they should be subject to the same prudential and other regulatory requirements as general insurance companies.”
Whelan says that introducing competition to the underwriting process will alleviate financial risk for all parties involved.
“Competitive underwriting for these schemes will remove the financial risk to governments, taxpayers and future policyholders. It will drive innovation, and provide choice for consumers,” Whelan says.
“The ICA welcomes Treasurer Scott Morrison’s commitment to work with the states and territories to reach agreement on nationally consistent competition reforms, and hopes this issue will be seriously considered.”