Regulatory update 2012: Insights from the Australian Securities and Investments Commission
A speech by Peter Kell, Commissioner, ASIC to the Insurance Council of Australia (ICA), 22 February 2012
Thank you for inviting me to speak to you today.
The Insurance Council’s annual regulatory update is a great opportunity for the industry to discuss current regulatory issues impacting insurers and their customers, and to hear from regulators about their priorities and areas of focus for the year ahead.
Australians benefit from a strong and effective insurance industry.
The insurance industry has a history of being relied upon to provide insurance protection and security to the community. This reliance has been particularly important given the high level of natural disasters over the last two years.
At the time of this update last year, several devastating natural disasters had already occurred. A year later, we have seen that trend unfortunately continue, with severe storms in Victoria, Margaret River bushfires in Western Australia, Christmas Day storms in Melbourne, and flooding in Queensland and NSW. The industry has dealt with high levels of claims, and has paid, or will pay, high claim amounts.
Of course there have been international events too, such as the Japanese tsunami and Christchurch earthquakes, which have repercussions on reinsurance costs.
You will all be very aware of the focus on the insurance industry over the past year—for instance, there has been a Queensland Commission of Inquiry, and two Federal Government initiated Inquiries, as well as other government policy reform initiatives focusing on general insurance. These inquiries have highlighted government and community concerns about such issues as consumers’ understanding of flood cover, disclosure documents, the claims handling process, and how internal and external dispute resolution procedures operate.
The government has initiated some reforms to the regulation of general insurance, such as a common definition of flood, a key facts sheet for home building and contents policies, and is consulting on other proposals arising from the Natural Disaster Insurance Review, and other initiatives. Some changes are also mooted for the General Insurance Code of Practice.
While we continue to consult with Treasury, industry and other stakeholders as required on these various initiatives, today I will focus on some issues of particular interest to ASIC.
We recognise that this is a busy time for the industry, with the various regulatory reforms initiated by Government on top of the usual commercial pressures. We are confident that the industry can meet any challenges this may represent, with an innovative and responsive approach, and a commitment to the fair treatment of consumers. '