Supplementary Remarks – Mr Steven Ciobo MP, Deputy Chair, Ms Kelly O’Dwyer
MP, Mr Scott Buchholz MP, Liberal Party of Australia
Liberal Members of the Committee agree with the overall
observations of the Committee report regarding the need and support for a
common definition of “flood”; and the benefit of a key facts sheet for
Liberal Members cannot, however, agree with paragraphs 2.50
and 2.51 of the report that outlined assurances the Department of Treasury was
engaged in constructive dialogue with industry and consumer groups; as well as
the observation that there were “no points raised in submissions or at the
hearing that the Treasury was not already across or was taking steps to
The clear evidence from industry representatives at the
hearing was industry’s frustration that many of the issues – as identified in
this report - that have been raised with the Government over the operation of
the Insurance Contracts Amendment Bill 2011 (ICA) remained unresolved, with
industry awaiting comprehensive consultation on regulations before obtaining
any clarity on the identified issues.
We note that disappointingly the ICA Bill is bereft of much
of the detail craved by industry to bring certainty; and industry and consumer
confidence in the Gillard Labor Government’s policy response is contingent upon
the regulations made under the ICA Bill beingavailable.
In the absence of this detail, it is our observation that
support is on a principles only basis, with the regulations holding potential
to make matters worse rather than better.
Ms O’Dwyer: ... My
question is directed to the Insurance Council of Australia … concerning the
legislation that is before us – and I am conscious that the regulations have a
lot of the details here – in your view is it going to make it simpler or more
complex for people to take out flood insurance?
Mr Anning: That detail
needs to be looked at but the reasons we strongly endorse these two proposals
is we think a common definition of flood does not make it simpler for people to
understand their insurance cover and similarly a key facts sheet does have
limitations. As NIBA explained, it is very difficult to summarise an insurance
policy on one page, but as a means of highlighting particular aspects of the
policy that the consumer needs to think about and to be able to compare with
policies from other insurers, we think there are advantages in going down that
Ms O’Dwyer: But you would
need to be satisfied as to the detail in the regulation before you could answer
that question with any certainty – is that right?
Mr Anning: That is right.
Also we need to be very clear about what the purpose of a key fact sheet is. We
would not want people to be encouraged to take purchasing decisions solely on
the basis of the key fact sheet because it will actually be a high-level
summary of the information.
Ms O’Dwyer: Given it is a
high-level summary, do you think that then could have the potential to be more
confusing for potential consumers.
Mr Anning: It does have
that potential, unless it is clearly explained to consumers what the key facts
sheet is to be used for.
Similarly, the absence of a definition of flood in the Bill
and the need for the definition to be clarified in regulation means industry
and consumers continue to have no clarity on how they will be affected.
Mr Ciobo: So the standard
definition would cover an event where sea water went into people’s homes, would
Mr Anning: It would depend
on what the definition of flood is decided to be.
Mr Ciobo: Wasn’t that the
entire point of this bill?
Mr Anning: Not the actual
definition of flood. That is subject to the discussions under the regulations.
Mr Ciobo: So, we actually
have no clarification yet of what the impact of this would be on potentially
thousands of people…
Mr Anning: …I guess the
point is we are not at the point of having the clarity to even form a view.
Liberal Members of the Committee are of the view that given
the length of time that has expired since the Gillard Labor Government
undertook to clarify insurance issues, it is disappointing that the ICA Bill
only addresses two issues, and these two issues remain unclear as the
regulations actually contain the detail industry and consumers need to obtain
Ms Kelly O’Dwyer, MP
Mr Scott Buchholz, MP