On 9 May, the Commonwealth Treasury released its much awaited discussion paper outlining policy options to assist consumers and increase competition in the North Queensland insurance market. Submissions close on 2 June 2014.
The three options put forward for discussion are:
Increasing consumer awareness: development of an insurance comparison website
The spectrum of comparison website options are outlined from informative periodic reporting (akin to the Victorian Fire Services Levy Monitor site), indicative/sample quoting to a live quoting site.
It also invites opinion on whether the comparison site should be a national or regional-specific solution (i.e. limited to North Queensland) and whether it should be facilitated by a government agency such as ASIC or ACCC, or tender for a private operator
Promoting buildings’ resilience to natural disasters
The paper noted CGU’s strata building resilience program in North Queensland which commenced in mid April 2014 and the collaboration with James Cook University to share the research outcomes with the industry. Interestingly, the government’s budget commitment of $12.5 million to strata building assessments seems to duplicate efforts already being made by industry.
Expanding insurance markets – relaxing of restrictions on unauthorised foreign insurers
In order to encourage more entrants into the North Queensland property and strata insurance market, the option of opening the market to foreign insurers is being considered. Foreign insurers would be free from the restraint of local prudential standards (including capital requirements) and may enjoy a cost advantage over local insurers which could enable them to offer lower-priced insurance.
Foreign insurers may not be subject to important consumer protections such as the Financial Claims Scheme.