ICA Advocates for Structural Reforms to Compensation Scheme of Last Resort
Addressing Funding Pressures to Enhance Consumer Protection
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The Insurance Council of Australia (ICA) has called for structural reforms to the Compensation Scheme of Last Resort (CSLR) to address growing funding pressures and enhance consumer protection.
This appeal comes in response to a Treasury consultation paper examining the role of professional indemnity insurance in compensation claims.
Designed to protect professionals against negligence claims, professional indemnity insurance does not cover fraud, criminal conduct, or systemic failures-categories that account for a significant proportion of claims currently entering the CSLR. Attempting to expand professional indemnity cover to respond to these issues would simply shift the problem from one group to another and add significant costs to premiums without meaningfully addressing the reasons for the CSLR’s significant shortfall.
To put the CSLR on a sustainable footing and better protect consumers, the ICA's submission identifies three priority reforms:
Implementing a more equitable funding model that distributes costs fairly among all stakeholders.
Enhancing regulatory oversight to prevent misconduct and reduce the incidence of claims.
Improving transparency and accountability within the scheme to build consumer trust.
These proposed reforms aim to ensure the long-term viability of the CSLR and provide more effective protection for consumers.
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