A national comparison website for home insurance and greater power for consumers in claims settlements are among measures proposed by the ACCC in its latest Northern Australia Insurance Inquiry report, released today.
The second update report of the inquiry finalises 13 recommendations aimed at boosting price transparency and consumer choice in northern Australia, whose residents pay considerably higher premiums for home, contents and strata insurance.
“Communities across northern Australia have told us of their frustration and, at times, distress, in trying to find suitable and affordable insurance in this market,” ACCC Deputy Chair Delia Rickard said.
“Consumers have been given little visibility into how insurers assess risks, set premiums, or why premiums in this region continue to rise. The opacity and complexity of these markets makes comparing products extremely difficult.”
“Our recommendations aim to give consumers the clear, simple information they need to make these crucial decisions about their insurance cover,” Ms Rickard said.
The ACCC has recommended the Australian Government consider a national home insurance comparison website, to provide consumers with clear information about their choices and to support competition between insurers. Insurance companies would be required to participate in the website.
“While there are commercial comparison sites available, these do not compare products from all providers, and Australia’s four biggest insurers do not participate in these websites at all,” Ms Rickard said.
In addition, consumers should be given the right to choose how their home insurance claim is settled, either through a repair or rebuild managed by the insurer; or through a cash payment (after receiving appropriate warnings about the risks of taking a cash settlement). This right should be legislated through changes to the Insurance Contracts Act.
“Consumers may prefer a cash settlement so they can have more control over which builders are used, as well as the scope and timing of the repairs or rebuilding work,” Ms Rickard said.
“In other cases, insurers may finalise a claim with a cash settlement when a consumer would prefer that the insurer manage the repair work.”
“We believe consumers should have the right to choose how their claims are settled.”
The ACCC has recommended consumers be provided with more useful and clear information about insurance products, for example on the premium costs or savings that will stem from optional inclusions or exclusions.
“Insurers should also provide more guidance to consumers on mitigation measures that have been undertaken on properties with similar characteristics, and a guide to the premium reductions that have resulted from doing so. This will give consumers more reliable and practical information on their options to reduce risks,” Ms Rickard said.
Other recommendations include that the minimum time for consumers to be provided with a renewal notice before a policy expires to be extended from 14 days to 28 days to encourage shopping around, and for measures to help consumers consider the costs of insuring a property before they buy it. The ACCC has also proposed that strata managers be paid only by their body corporates, and not accept payment from insurance brokers or insurance companies when they arrange strata insurance.
