FAR Northerners have just a few days left to contribute to the discussion paper on insurance, which seeks to pin down exactly how consumers want the aggregator website and other competition-boosting mechanisms to work.
As detailed in the Budget, the Government will fund the creation of a website to compare property insurance prices and policies, something which doesn’t currently exist in Australia.
“An aggregator website for property insurance would work just like those for your car insurance or health insurance you put in the relevant details and the system pulls information from a range of different insurers before presenting you with prices and policies to consider,” Mr Entsch explained.
“They’ve been very successful in the UK at driving down prices.
“The discussion paper seeks to find out exactly how people think the website should work whether they just want a basic list of insurers that will provide cover in FNQ, right through to putting in detailed information and getting a property-specific price that can be purchased straight away.
“There’s also the issue of how we let foreign insurers into the market would people be comfortable with buying insurance through an Asian or European insurance company? Is there a perception that they are less secure or accessible than Australian-based insurers?”
The budget also commits $12.5 million to the Queensland Government to provide grants to body corporates to undertake engineering assessments of strata-title properties, to help identify and mitigate risks and allow insurers to set more accurate premiums.
“We need to find out whether people think there’s a role for government in promoting resilience, and are there other options that should be considered? As you can see there are a whole range of aspects to nut out, particularly the benefits and pitfalls of each option.”
This formal discussion paper, issued by the Minister, is a necessary step in the Government’s Regulatory Impact Statement process to develop the aggregator website.
Mr Entsch said he has also met with senior insurance representatives in Canberra and Cairns over recent months, who are mindful that “the writing is on the wall”.
“They are well aware that if they do not take action themselves, the government is prepared to legislate and, effectively, intervene in the market,” Mr Entsch said.
“Unfortunately we can’t restrict the amount that insurance companies can charge, and with the current financial situation it’s impossible for either the Queensland Government or the Federal Government to consider setting up an underwriter or a SGIO.
“I’ve accepted advice that the measures we are taking are going to be successful in increasing competition and driving down prices. However, I will be monitoring the situation very closely and I have more extreme measures that I am determined to promote if these initiatives don’t achieve an acceptable outcome.”
The discussion paper complements the Australian Government Actuary (AGA) report into strata building and home insurance pricing, comparing prices between southern and northern cities over the past eight years, which is due for release in coming weeks.
“From preliminary discussions I’m told that the report is fairly damning of the insurance companies,” Mr Entsch said. “I’m looking forward to seeing the full findings.”
A copy of the discussion paper is available on the Treasury website at http://www.treasury.gov.au/ConsultationsandReviews/Consultations.
Submissions close on Monday, 2nd June 2014. Submissions should be in Word or PDF format and emailed to insuranceconsultation@treasury.gov.au Full contact details such as postal address and phone number must also be included.
