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Industry culture must change: ASIC

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Insurers must change their culture to focus on “doing the right thing”, rather than maximising profits, according to the Australian Securities and Investments Commission (ASIC).

In a speech at an Australian Insurance Law Association seminar last week, Deputy Chairman Peter Kell outlined the regulator’s view on the future of the financial services industry.

“This issue applies just as much to the insurance sector as any other part of the financial services market,” he said. “Improving culture – by which I mean basically the set of shared values at the heart of how an organisation and its staff think and behave – is crucial to improving conduct within the industry.

“There needs to be a shift in people’s attitudes and behaviours towards ‘doing the right thing’ and ‘ensuring good outcomes for customers’.

“Culture should no longer be about maximising profits at all costs without regard to market integrity and investor and financial consumer trust and confidence.”

Mr Kell also discussed concerns about add-on insurance sold by car dealerships, which tends to give consumers poor value.

“ASIC’s scoping inquiries into these products have shown commissions paid by insurers to car dealers can be very high – close to 75% of the premium or more – so the amount of the premium available to the insurer to meet claims is very low,” he said.

He also referred to affordability issues in north Queensland and the website introduced on March 31 to help residents compare home and contents policies.

Mr Kell says ASIC will continue to monitor and update the site based on new policy features, new price information and feedback from users and participating insurers.