NIBA / Feature
CONDUCT A REVIEW OF REGULATORY COSTS AFFECTING INSURANCE ADVICE
ESTABLISH A NATIONAL EMERGING RISKS ADVISORY COUNCIL
Affordability key for ICA pre-budget submission, too
Our risk landscape is evolving far beyond traditional natural hazards, and Australians are largely unprepared. Research indicates that 67% of businesses expect to be impacted by cyber incidents, yet only 20% of small and medium enterprises have standalone cyber insurance policies. Even among larger businesses, coverage rates remain inadequate, with estimates suggesting only 35-70% have appropriate cyber protection. This protection gap leaves Australian businesses and consumers exposed to risks they may not fully understand or have the tools to effectively mitigate. NIBA proposes establishing a National Emerging Risks Advisory Committee, formed by members of relevant government agencies, industry bodies including NIBA and the Insurance Council of Australia, the Actuaries Institute, and small business representatives, to provide coordinated, expert guidance on emerging risks and appropriate mitigation measures.
Since the Financial Services Royal Commission, the regulatory burden on the insurance broking profession has continued to grow significantly. While many of the Royal Commission reforms have been implemented, the anticipated reduction in regulatory pressure has not materialised. Instead, successive regulatory changes have added layers of compliance with minimal corresponding relief to offset these burdens. While individual regulatory reforms may have merit, the cumulative effect of continuous change since 2019 has significantly increased compliance costs for advisers. These costs are ultimately borne by consumers, either through higher fees or reduced access to professional advice. NIBA believes there is value in taking stock of the cumulative regulatory changes affecting general insurance advice since the Royal Commission. An independent audit, conducted by Treasury or the Productivity Commission, would provide an evidence base for ensuring regulatory settings achieve their intended consumer protection objectives without creating unnecessary barriers to advice.
The pre-budget submission from the Insurance Council of Australia (ICA) echoes some of the key themes from NIBA’s submission, with affordability and disaster recovery featuring highly. The ICA’s headline proposal is a $30.15 billion Flood Defence Fund over 10 years, alongside expanding disaster resilience funding, rolling into a long-term program focused on preventative infrastructure. The ICA also proposes system-wide reforms, including: • Stronger building codes and land use planning to reduce exposure in high-risk areas • The creation of a National Hazard Data Asset to improve risk modelling and planning • The reform of state-based insurance taxes • Reduction in regulatory burden.
NIBA .COM.AU / 13
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