on September 2, 2014 by admin in Insurance Industry, Comments (0)

Insurance industry pushes for changes

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"There is considerable potential for the private sector to increase efficiency and productivity in this part of the financial sector to provide better outcomes for policy holders and most importantly, people who are injured," the Suncorp submission, which was signed by chief executive of personal insurance Mark Milliner and chief executive commercial insurance Anthony Day noted.

"It has long been acknowledged that privatising personal injury insurance schemes presents a significant opportunity to improve productivity across the country.

"By introducing additional competition into these schemes there is the potential to bolster transparency, innovation, efficiency and service provision in this market."

The Murray inquiry's interim report questioned whether opening up state and territory controlled insurance schemes, such as workers compensation and compulsory third party cover, would "improve value for consumers".

Insurance Australia Group, the owner of NRMA and CGU, also pressed for privately underwritten workers compensation schemes across Australia to fuel competition.

"Private insurers have the expertise to adapt to different pricing models commensurate with the specific needs and characteristics of different schemes," IAG argued in its submission.

"In turn the competitive market provides an incentive for insurers to invest in order to maximise efficiency and service innovation ultimately contributing to lower business costs and better safety and return-to-work outcomes for employers and their injured workers."

IAG noted, too, that because state schemes were exempt from prudential regulations many had been underfunded which could have "detrimental social and economic consequences" through catch-up premiums or reductions in eligibility for workers.

Some states have already made moves in this direction. South Australia will call for private tenders in 2016 to offer CTP insurance to replace a state-run monopoly.

Suncorp also warned that adequacy of consumers' cover remains a big issue in the event of accidents, illness or injury.

Suncorp Life boss Geoff Summerhayes argued that public policy changes were needed to improve the take up of life cover including income protection.

"I recommend government and the life insurance industry focus on simplicity and value in the delivery of products and services to consumers," he said in his submission to the FSI.

"This includes development of a simplified life, trauma, total and permanent disability (TPD) and income protection product assessment questionnaire that could be accessed by consumers through the ASIC MoneySmart website."

Government red tape is strangling insurance companies' ability to create life products that meet consumers' needs and fuelling unnecessary public sector cost, according to the Financial Services Council.

Australia's insurance framework is too fragmented and requires separate licences for individual products, stifling companies from providing multi-purpose policies such as combined health and life policies, the FSC argued in its latest submission to the Financial System Inquiry.

"We are recommending to the Murray review that the prudential framework be streamlined so the industry can develop innovative products that better meet the needs of consumers," Andrew Bragg, director of policy for the FSC, said.

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Article source: http://www.smh.com.au/business/banking-and-finance/insurance-industry-pushes-for-changes-20140831-10ak1w.html

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