The Australian Competition and Consumer Commission (ACCC) has released an Update Report on the progress of their inquiry into Northern Australia Insurance.
In July 2017, the competition regulator commenced an inquiry into the supply of residential (home), contents and strata insurance in northern Australia, following direction from the Australian Government. Early analysis shows that while northern Australia makes up only five per cent of the number of policies, it accounts for about 10 per cent of premium revenue.
The update report notes the submission to the inquiry by NIBA, but also indicates concerns by consumers and others in relation to “the role and significance of commissions and other payments between insurers, intermediaries (such as brokers) and strata managers”.
“Our inquiry aims to address concerns about insurance availability and affordability, promote informed and competitive insurance markets, and make a difference for consumers in northern Australia,” ACCC Acting Chair Delia Rickard said.
The ACCC is examining whether these payments are transparent, whether they provide incentives and if so to whom, and whether they are working in the interests of consumers. As all brokers are aware, there are important requirements in the Corporations Act and related ASIC publications regarding the disclosure of remuneration to clients. The Insurance Brokers Code of Practice also has provisions regarding disclosure of remuneration – see Service Standard 6.
“Some participants highlighted that insurance premiums are rising significantly and people and families are facing increasing financial distress. Many residents consider there is little choice, especially in strata insurance markets and some regional towns,” Rickard said.
The ACCC continues to analyse information received from insurers for their next report in November, which will make initial recommendations to government and industry on opportunities for change. Further reports will be released in November 2019 and 2020. NIBA will continue to monitor the progress of this inquiry, and will report further developments as they occur. The full update report is available here.