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NIBA to take ACCC report concerns to Treasurer

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The National Insurance Brokers Association (NIBA) will raise concerns over the Australian Competition and Consumer Commission’s (ACCC) insurance inquiry report with Treasurer Josh Frydenberg.

NIBA has criticised the way availability and affordability issues in the northern Australia insurance report are represented and rejects a recommendation for broker commissions to be replaced by a fee-based system.

“I’m concerned that a lot of this report was prepared on the basis of technical analysis of data rather than full engagement with people on the ground familiar with the issues and challenges on a day-to-day basis,” NIBA CEO Dallas Booth told insuranceNEWS.com.au.

The report, concluding a three-year inquiry into northern Australia insurance availability and affordability, was delivered to the Treasurer at the end of November and publicly released after Christmas.

The ACCC makes 38 recommendations -11 new proposals and 27 brought through from the second interim report. As reported by insuranceNEWS.com.au in a Breaking News bulletin on December 30, it continues to recommend extending the ban on conflicted remuneration to brokers.

The document repeats a previously cited example of brokers reducing purchases from an insurer that cut commissions, despite NIBA advising that other changes were also introduced that made the offering less suited for some clients.

“I’ve been told by a number of brokers that the fact that the commission was changed is not the reason why they lost business, it was because of other changes that were made to the product portfolio,” Mr Booth said.

The battle over conflicted remuneration will be fought as part of a Government review recommended by the Hayne royal commission.

“The ACCC indicated they look forward to making submissions to the 2022 review recommended by the royal commission - so does NIBA,” the group said.

Mr Booth also says the report on one hand highlights affordability and availability issues, but then plays down market failure concerns in favouring direct subsidies over reinsurance pools, if the Government decides it wants to intervene.

“They say there is plenty of reinsurance cover available for the Australian market and they also say there are eight insurers providing cover into northern Australia,” he said. “Our members are absolutely adamant that they are very lucky to get two quotes, and most of the time struggle to get two quotes.”

NIBA will provide a detailed response to the Federal Government, highlighting that taking action on commissions will not ease northern Australia issues and addressing other concerns.

The ACCC report again presses for the abolition of stamp duty on home, contents and strata insurance products, or redirection of revenues towards mitigation works, in a proposal widely welcomed.

New recommendations in the final report to improve building codes and planning processes have also been supported by the Insurance Council of Australia.

“The insurance industry is already working with resilience agencies, scientists, local government and the building sector to develop above code standards for homes and commercial properties,” CEO Andrew Hall said.

The Financial Rights Legal Centre supports proposals including making product comparisons easier, banning conflicted commission payments to brokers, help for customers experiencing payment difficulties and direct Government subsidies.

“The Australian Government must intervene to ensure that insurance for Australians at risk of experiencing bushfires or other natural hazards is affordable,” Director of Casework Alexandra Kelly said.

“We support the ACCC’s conclusion that direct subsidies have the greatest potential to work in a targeted way to relieve some of the acute affordability and cost of living pressures facing consumers in higher risk areas.”

The Strata Community Association (SCA) says it is encouraged by proposals such as cutting taxes and direct subsidies for premium holders, but remains concerned that the report doesn’t sufficiently address market failure issues for its members in northern Australia.

“A number have strata properties that simply cannot get insurance,” President Andrew Chambers told insuranceNEWS.com.au. “There is an availability issue. It is real and a lot of our members, particularly in north Queensland are dealing with that on a daily basis.”