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ICA, NIBA support standard cover overhaul

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Insurers and brokers have supported an overhaul of the standard cover regime as part of measures to assist consumers in buying the most suitable policies.

The Insurance Council of Australia (ICA) says it strongly supports a review and will make available its detailed consumer research on the value of introducing core covers for home and contents insurance.

Current standard cover arrangements are not facilitating good decision-making and the issue can’t be simply fixed through more prominent disclosure, it says.

“For some types of policies, the insurance council considers that it is likely to be more productive to develop a cover package of covers which would be common to all policies,” it says in a response to a Treasury discussion paper on disclosure issues.

The National Insurance Brokers Association (NIBA) says standard cover is only part of the solution but the current regime is not meeting the intended purpose and needs amendment.

Finding the right balance will require work by a group “trusted by all” and which should include NIBA, ICA, consumer representatives, the Australian Securities and Investments Commission, Australian Financial Complaints Authority and government representatives, it says.

NIBA proposes that insurers providing less than standard covers should include a clear warning that no consumer can miss and which explains reasons for the differences and the implications.

On other issues, ICA and NIBA say there may be scope in some areas to extend standard definitions, while they reject proposals for component pricing.

ICA favours year-on-year premium comparisons in renewal notices, while NIBA is supportive in cases where consumers are not using a broker.

The Government tasked Treasury with reviewing improved transparency and disclosure measures to assist consumers as part of its response to a Senate committee inquiry into general insurance.

ICA says better consumer outcomes cannot be achieved solely through greater disclosure and proposes a nine-point action plan for the industry and government to galvanise improvements in consumer understanding.