Insurance Council of Australia Regulatory Update, Speech by Commissioner, Dr Peter Boxall, to Insurance Council of Australia, Sydney, 9 March 2011
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All Australians benefit from a strong and responsive insurance industry.
Throughout its history, the insurance industry has been relied upon to provide insurance protection and security to the community. In Australia, that reliance has never been more important given the recent series of natural disasters.
In 2011 alone, we have seen bushfires in Western Australia, severe storms and flooding in Victoria, Cyclone Yasi, and of course, the devastating floods in Queensland. Current estimates put the cost of these disasters to insurers at nearly $3 billion. Across the Tasman, we also now have the earthquake that struck Christchurch which will impact a number of Australian insurers. Over and above the human impact, it is going to be a very busy year for the insurance industry from a policy and regulatory perspective. One of the impacts of such disasters is that they put the insurance industry to the test, and draw out issues for examination, whether it be scope or understanding of cover, what happens when you contact your insurance company, the effectiveness of claims handling or the training and development of staff.
The Queensland floods have focussed attention on challenges such as unresolved issues around flood cover, disclosure and the application of unfair contract terms requirements for insurance. While these issues are primarily matters of policy, they signal a year where insurance is likely to receive a good deal more attention than perhaps has been the case in previous years. They also come on top of some existing regulatory reform which is relevant to the insurance industry, such as the Future of Financial Advice reforms.
At the same time, the insurance industry is changing and facing new challenges. We are seeing new entrants placing competitive pressures on existing players and also some pressure from insurance aggregators.
I am confident that industry can prosper by meeting these challenges, with innovative and responsive thinking and a commitment to the fair treatment of insurance consumers.