Shadow minister for financial services Pat Conaghan says over-regulation is holding back the insurance industry, and the corporate regulator should be split up to enable a more consultative approach.

“That is one of my biggest bugbears,” he told this week’s National Insurance Brokers Association Convention on the Gold Coast. “You are tied up in knots."

The Nationals’ federal MP for Cowper in NSW told delegates over-regulation distracts brokers from helping clients, and “that’s something we need to change”.  

He said he recently “picked a fight” with the Australian Securities and Investments Commission for targeting “low-hanging fruit” such as financial advisers and the insurance industry.

He says ASIC should be working with the sector to help it prevent problems and to grow, rather than focusing on prosecution, litigation and punishment.  

“I believe we should be splitting ASIC up. They can have their prosecutorial arm, their litigation arm, but we need an arm that works with the sector, that works with you to make sure you’re secure, that you can grow.”

Mr Conaghan believes insurance affordability and accessibility is the “number one issue” for Australian SMEs, and government and opposition must work to tackle it.

“It is about good policy based on consultation with the industry. Because, as a former lawyer, former police officer, I’m not very good at insurance. So it has to come from you and it has to be developed by people with real experience in the industry, with real experience in business, and people who understand that good policy or bad policy could make or break a sector.”

The convention also heard, via video, from Financial Services Minister Daniel Mulino, who argued for regulators to work more closely together.

“Obviously, in financial services, and this includes insurance, there are a number of regulators,” he said. “I think there’s a feeling that what we need to do is, where possible, align the actions of those regulators and … one area we might first look at … is data collection from entities, just to try to line up the regulator asks where possible.

“I start from the proposition that we should remove unnecessary red tape, but I also acknowledge that most regulation is there for a good reason, so we just have to carefully step through looking at regulation and rationalising it where possible.”

Dr Mulino stressed the importance of mitigation efforts, insurers’ code review, and work to standardise terms such as wear and tear and maintenance.

“There’s also potentially work that we will start around standardising terms for non-flood water damage. I think that’s really important in providing greater certainty to consumers, and that’s something brokers often get involved in.

“I think it would make the work of brokers easier if we have standardised key terms.”

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