The Insurance Council of Australia (ICA) has called for the removal of state insurance taxes as part of its response to the House of Representatives Standing Committee on Economics’ inquiry into insurers’ responses to 2022 major floods claims.
The ICA argues that state insurance taxes add to the cost of insurance premiums, making it more difficult for consumers to afford adequate coverage. By removing these taxes, insurers would be able to pass on savings to consumers, making insurance more affordable. In addition to removing state insurance taxes, the ICA also supports other recommendations from the inquiry, such as:
- Ongoing government investment in resilience and mitigation measures to reduce the impact of natural disasters.
- Changes to planning arrangements to prevent development on floodplains.
- Improved service standards from insurers, including greater investment in people, tools, and training.
The ICA believes that by implementing these recommendations, the insurance industry can better protect consumers from the financial impacts of natural disasters. It is important to note that the removal of state insurance taxes would require the support of both the federal and state governments. However, the ICA believes that the benefits of this measure would outweigh the costs. In addition to the removal of state insurance taxes, the ICA has also called for the following measures to be implemented:
- A standardized maintenance and wear and tear clause to be developed for insurance policies.
- Improved identification and handling of vulnerable customers.
- Continued collaboration between the insurance industry, governments, stakeholders, and regulators to improve the industry’s response to extreme weather events.
The Insurance Council of Australia (ICA) today welcomed the the House of Representatives Standing Committee on Economics’ report following its inquiry into insurers’ responses to 2022 major floods claims. The report provides 86 recommendations aimed at further improving the insurance industry’s response to natural disasters and enhancing consumer protections. The ICA strongly supports those recommendations which would put downward pressure on premiums and help safeguard communities from future extreme weather events. These include the removal of state insurance taxes, ongoing government investment in resilience and mitigation, and changes to planning arrangements to stop development on floodplains.
ICA CEO Andrew Hall said: “The four flood events across 2022 were unprecedented and saw more than 305,000 claims and $7.7 billion in incurred losses, including $6.3 billion incurred from just one event. Insurers acknowledge there were failures of systems, processes and resourcing in response to the extreme weather events that occurred during 2022, and the industry is already taking action to address these challenges. The ICA and its members thank the Committee, particularly its Chair Dr Daniel Mulino MP, for their work inquiring into this important issue and we look forward to continuing to collaborate with the Government, Opposition and other stakeholders on the report’s recommendations.
“Getting the balance right between good customer outcomes without putting further pressure on premiums will be key to successful implementation.”
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