Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'
Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'
The Insurance Council of Australia (ICA) recently published an action plan in response to 150 recommendations from the parliamentary floods inquiry and a comprehensive review of the industry code of practice. Despite the consensus among both reviews that insurers should not charge more for monthly payments than they do for annual ones, and renewal premiums should not surpass those offered to new customers, the ICA asserts that enforcing pricing policies is not within the code's remit due to competition law restrictions.
Continuous concerns have been raised about the code's enforceability and the numerous recommendations the ICA did not fully endorse. Financial Rights Legal Centre's Drew MacRae stated that around 38 recommendations are still under consideration, or have been delegated to individual companies to decide upon.
Financial Counselling Australia has expressed significant concern that the ICA's action plan does not actively address inequitable pricing practices. According to their disaster recovery co-ordinator, Louise Hayes, it is essential for insurers to address these unfair practices and incorporate them into the industry code to ensure accountability and equity.
While the ICA's action plan includes some positive initiatives, such as a framework for assisting vulnerable customers, it also drew criticism for lacking a firm commitment to enforceability. The recommendations from the inquiry suggested these policies should be embedded contractually within product disclosure statements to strengthen consumer protection.
Stephanie Tonkin, CEO of Consumer Action Law Centre, highlights the importance of rebuilding consumer trust, especially following the response to the 2022 floods. She stresses that the industry's focus should shift more towards customer welfare rather than profitability, with enforceable actions driving this change.
ICA CEO Andrew Hall noted that the action plan aims to guide industry changes over the coming years with a central focus on enhancing the customer experience. He acknowledged the necessity of collaborating with consumer advocates, regulators, and the government to tackle the underlying issues cited in the reviews.
Published:Wednesday, 26th Mar 2025
Source: Paige Estritori
Share this news item:
| Allianz and AWP Face Hefty Penalties for Misleading Insurance Claims 01 Apr 2025: Paige Estritori The Supreme Court of New South Wales has imposed significant criminal penalties on Allianz Australia Insurance Ltd and AWP Australia Pty Ltd. Allianz received a $13.5 million fine, while AWP was fined $3.3 million. These penalties were for falsely or misleadingly promoting financial products online, breaching sections 1041E(1) and 1311(1) of the Corporations Act 2001. - read more |
| AFCA Rules in Favour of Owners in Lift Vandalism Dispute 28 Mar 2025: Paige Estritori In a landmark decision, the Australian Financial Complaints Authority (AFCA) has mandated that Chubb Insurance replace the hoist ropes of two lifts in an apartment block, following damage attributed to vandalism. The owners' corporation successfully argued that the damage to the lifts was part of a previously recognized vandalism incident. - read more |
| NSW Government Targets Predatory Practice of Claim Farming 28 Mar 2025: Paige Estritori The New South Wales Government is taking decisive action against 'claim farming', a predatory practice that exploits vulnerable individuals by pressuring them to file compensation claims. This practice often involves unethical tactics targeting susceptible groups, including child abuse survivors. To combat this, the government is set to introduce the Claim Farming Practices Prohibition Bill 2025. - read more |
| RAA Partners with Duck Creek for Major Tech Overhaul 27 Mar 2025: Paige Estritori The Royal Automobile Association (RAA), a leading motoring group in South Australia, is set to revamp its technology infrastructure by adopting Duck Creek's OnDemand cloud platform. This strategic transition will see RAA's outdated systems for motor and home insurance transformed to include streamlined policy, rating, billing, and claims management, as well as enhanced data handling and insights capabilities. - read more |
| Understanding Various Life Insurance Types: Which One is Right for You? Financial security is one of the most important aspects of modern family life. Ensuring that loved ones are protected and well-supported in the event of an untimely death is a fundamental concern for many Australians. - read more
|
| The Digital Age of Health Insurance: Comparing Policies Online The dawn of the digital age has significantly transformed the way we approach nearly every aspect of our lives, and the domain of health insurance is no exception. With the arrival of innovative digital tools, the health insurance landscape has undergone a striking evolution, allowing for unprecedented accessibility and convenience in managing healthcare coverage. - read more
|
| Understanding the Process: A Beginner's Guide to Income Insurance Claims Income insurance, an often-overlooked component of financial security, is gaining traction among Australia's burgeoning self-employed population. In an economy where traditional employment is no longer the sole path to success, this form of insurance has become a cornerstone for proactive financial planning. Touted as a safety net, it ensures that personal livelihoods and business operations remain secure in the face of adversity. - read more
|
| Dispelling the Myths: Why Income Protection is More Accessible Than You Think Income protection insurance serves as a financial safety net, designed to support individuals in the event that they are unable to work due to illness or injury. The significance of this type of insurance lies in its ability to provide a continuation of income during tough times, ensuring that one's financial responsibilities are taken care of. - read more
|
The concept that individuals may take on more risk when they do not bear the full consequences of that risk, often relevant in insurance scenarios.