The competition regulator will deliver a draft decision mid-year on proposed home insurance standard definitions for “wear and tear” and “reasonable steps to maintain”, amid concerns about lack of clarity.

An Insurance Council of Australia application says the definitions address a rise in denials driven by customer confusion about maintenance obligations and the meaning of wear and tear in exclusions.

“These concerns have been raised in significant government and regulatory reviews and inquiries, as well as by consumer groups and other key stakeholders,” it says.

An education campaign involving ICA and individual insurers is also proposed.

Definition issues were highlighted during the federal inquiry into the 2022 floods, which recommended ICA accelerate its work with the Australian Competition and Consumer Commission.

ICA says it has consulted with consumer groups since late 2024 and has provided draft definitions to Treasury, regulators and the Australian Financial Complaints Authority.

It lodged its application with the competition watchdog on March 30.

An ACCC public consultation opened on April 2 and closes tomorrow, with ICA then given time to respond.

An Australian Consumers Insurance Lobby submission says definitions should be developed by Treasury or the Australian Securities and Investments Commission, and an independent expert review should assess consumer impacts before implementation.

Lobby chair Tyrone Shandiman says the group supports the standardisation of definitions, but industry should not lead the process.

“Based on our experience engaging with the industry across multiple government inquiries and related processes, we do not have confidence an industry-led process will prioritise the interests of consumers over those of insurers,” he said.

“Without independent review of equal capability, there is a real risk the ACCC is being asked to approve something it cannot fully interrogate.”

The ACCC will release a draft decision in June or July and a final determination in August or September.

ICA says it is separately considering home stump maintenance, after the floods inquiry proposed a distinction between observable areas and those out of sight.

The inquiry found that where “maintenance is not observable and infrequent maintenance is required, there should be a presumption of coverage by insurers unless exceptional circumstances can be established”.

The ICA application can be seen here.

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