LEICHHARDT MP Warren Entsch has hit out at the Insurance Council of Australia for its criticism of new initiatives and “reluctance to engage” during a speech to Parliament yesterday.
The move was prompted by the ICA’s response to a media release issued by the Acting Assistant Treasurer, Sen. Mathias Cormann, which outlined the Government’s current efforts to try and address insurance hikes in North Queensland.
“The ICA is concerned about Unauthorised Foreign Insurers being granted easier access to the market and said the industry was urgently seeking more details,” Mr Entsch commented.
“It shouldn’t be a surprise. We first flagged this back in December last year and it was again highlighted in May when Treasury released its discussion paper.
“The ICA is concerned that consumers ‘may not be able to rely on the company to deliver on its promise if the consumer needs to make a claim’.
“What a joke. Many consumers cannot even get a policy with an existing Australian insurer due to the lack of competition in the market or the ridiculously overpriced premiums, and that is why we are being driven to overseas insurers in the first place. “
Mr Entsch said the ICA and the National Insurance Brokers Association had also flagged issues with the aggregator website, saying consumers may buy a policy “on price alone”.
“Do they really think consumers are stupid?” he asked. “Do they think that consumers would purchase a product as important as property insurance, whose complexities have been amply highlighted in recent years, simply on the lowest price?
“A number of aggregator websites already operate in Australia; for private health insurance, car insurance, travel insurance and more. While the products are initially sorted by price, a summary includes the key points of cover for the policy, in a simple comparison with other policies that come up.
“There is no reason why our aggregator website cannot work the same way-except, of course, that it may highlight the lack of competition in the market if a search returns only a couple of results – or none at all.”
In closing, Mr Entsch highlighted the massive profits generated by the major insurers such as IAG’s $1.579 billion for the year (up 10.6 per cent from the previous financial year) and the $9 million annual pay cheque for AAI Ltd’s CEO Patrick Snowball.
“I think it’s time we started looking outside the square… companies or a model that, instead of focusing on profit, employs a concept that works to counter that-such as a mutual. Similar institutions already occur in the banking sector, like the Cairns Penny and Bendigo Bank, which have a community driven focus.
“They do not have the responsibility to provide returns to shareholders, so profits can be reinvested back into the fund. And, of course, all the policyholders become shareholders in the mutual. We are certainly looking forward to finding out more about this.”
Mr Entsch said he was also looking forward to meeting with the Territory Insurance Office this week in Canberra to see whether they have an appetite to engage across Northern Australia.