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Senate committee backs new product laws

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The Senate Economics Legislation Committee has today released its report recommending the passing of a bill that would introduce new product laws despite strong concerns from the insurance industry.

Insurance Council of Australia Policy Regulation GM John Anning told the committee last month premiums would rise as the changes would add to the cost of re-collecting policy information at each renewal.

These concerns were addressed in the report.

“There was concern that the bill would apply the design and distribution obligations to renewals of policies which would formerly have been automatic,” the report says.

“This would involve unnecessary (possibly large) costs and could lead people to drop policies and be left underinsured.

“The committee notes that draft regulations with the effect of including and excluding specific products have already been published. It believes that this step-by-step approach is appropriate, and that the industry must be ready for continual refinement of the bill.”

The National Insurance Brokers Association has asked for insurance to be excluded from the changes proposed in the Treasury Bill for design and distribution obligations and product intervention powers, while the impact is assessed.

Click here to see the report.