THEYEAR INREVIEW

CALL TO ACTION8

LEADING THE WAY ON REGULATION22

END IN SIGHT FOR UNFAIR TAXES

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© Insurance Council of Australia Limited 2013 Design: Icon.pr

Insurance Council of Australia Limited

Level 4, 56 Pitt Street, Sydney NSW 2000 t 02 9253 5100 f 02 9253 5111

www.insurancecouncil.com.au @ICAUS

CEO’s message 4-5

Board of directors 6-7

Call to action 8-13

End in sight for unfair taxes 14-17

Events 18-21

Leading the way on regulation 22-25

Contributing to compensation scheme reform 26-27

Renewed focus on media engagement 28-29

Find an Insurer helps consumers 30-31

Industry keeps self-regulation relevant 32

Executive team 33

Submissions 34-36

Committees and working groups 37

ICA members and brands 38-39

CONTENTSTHE

YEAR INREVIEW

RENEWED FOCUS ONMEDIA ENGAGEMENT28

EVENTS18

Despite being confronted again by catastrophes in three states, the industry anticipated the focus on their activities would continue, and the Insurance Council of Australia and its members embraced the challenges and opportunities this posed. The industry can be pleased with the way it acquitted itself in its disaster response and worked to strengthen trust with communities, governments and the media.

A key observation was the scope of reform nationally and in several state jurisdictions that will benefit the wider community and insurers in the long term.

The most significant of these, in my mind, was the enactment of regulations introducing a standard definition of flood. It followed 18 months of discussions with the Federal Government and was an outcome the

CEO’S MESSAGE

industry had first tried to achieve in 2008. Though the definition applied to new and renewed policies from July 1, many ICA members introduced it much earlier. Now, consumers who decide to purchase flood cover for residential policies have greater clarity and peace of mind about their protection.

The industry rapidly extended the availability of flood insurance, either as a standard inclusion to policies or as an additional product feature. Consumers have also been able to opt out of flood cover, or choose policies that specifically exclude flood. This provision of choice of products is the strength of a competitive market in which all residential consumers have flood cover available to them should they wish to purchase it.

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If 2011 was the year in which the general insurance industry stepped up in response to an unprecedented series of natural disasters, then 2012 was one in which insurers looked to the future.

At the request of Financial Services Minister Bill Shorten, the ICA started collating data from its members to measure the uptake of flood insurance. It showed a rapid growth in the number of policies purchased with flood cover and demonstrated consumers were making choices about the cover they require. In mid 2012, 76 per cent of residential policies sold in Australia had flood cover; by the end of the year this had grown to 83 per cent. In comparison, only 3 per cent of policies in 2006 had flood cover.

Despite these advances, the key issue remains – many of the towns and cities flooded in 2010, 2011 and 2012 will be flooded again unless governments urgently invest in permanent, well-designed and well-maintained physical mitigation infrastructure. Several ICA members sent a clear signal about this issue when they announced they would no longer write new premiums in two regularly flooded Queensland towns unless levees were constructed.

Though few additional funds were forthcoming for mitigation projects in 2012, the ICA will continue to argue the case for mitigation as a means of reducing the risk to many communities and thereby reducing the cost of policies. I remain hopeful that federal, state and local governments will heed the message and review their approach and their budgets next year.

After decades of campaigning, positive news for the industry came from Victoria, with the Baillieu Government announcing it would reform the funding of the state’s fire services and abolish the fire services levy. This was one of the key recommendations of the Bushfires Royal Commission.

The reform means that from July 1 next year, the funding for Victoria’s fire services will be shared across the community via a property-based charge and not be unfairly and inequitably carried by insureds. It removes a key disincentive for property owners to adequately insure their homes and contents, and will also have a direct impact on premiums.

The New South Wales Government is considering its own steps towards reforming its emergency services funding model, issuing a discussion paper and embarking on a consultation process. The ICA is confident it will eventually lead to the NSW Emergency Services Levy also being consigned to the history books.

The industry was pleased that the ACT announced it would phase out insurance stamp duties over a five-year period, an initiative the ICA would like to see adopted by all states by 2015. It is clear insurance affordability will be an ongoing hot-button issue, and governments control many of the fiscal levers that could reduce the costs to consumers.

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The program of engagement grew thoughout the year, with 57 public submissions made to government inquiries and investigations, many meetings with state and federal politicians, and a record level of media interaction to help further the ICA’s goals.

Finally, in response to some valid criticisms about the General Insurance Code of Practice, the ICA Board approved revisions that related to clear timeframes for claims handling, especially during declared catastrophes.

The Board also decided that the Code should remain relevant into the future, and appointed legal academic Ian Enright to undertake a thorough review. This process commenced mid year, and it is expected a report will be provided for the Board’s consideration in 2013.

At the end of the year Rob Scott, Managing Director of Wesfarmers Insurance, stepped down as President of the Insurance Council of Australia after a challenging two-year term.

His sterling work with the ICA board and executive team on many of the big issues that confronted the general insurance industry during his tenure has helped reinforce the essential role insurers play in the Australian economy and its communities.

The incoming President will be the current Deputy President, Mr Mark Milliner, Chief Executive of Personal Insurance with Suncorp Metway Insurance.

Robert Whelan Executive Director and CEO Insurance Council of Australia

Rob Whelan travelled more than 129,000km attending meetings, committee hearings and briefings for the ICA during 2012

2012 BOARD OF DIRECTORS

PRESIDENT:

1. Mr Rob Scott Managing Director, Wesfarmers General Insurance Limited Non-Executive Director since 2009

DEPUTY PRESIDENT:

2. Mr Mark Milliner Chief Executive Officer, Personal Insurance, Suncorp Metway Insurance Limited Non-Executive Director since 2009

EXECUTIVE DIRECTOR:

3. Mr Robert Whelan Executive Director and Chief Executive Officer, Insurance Council of Australia Limited Chief Executive Officer since 2010

DIRECTORS:

4. Mr Ian Berg Vice President and Operations Manager Australia, FM Insurance Company Limited Non-Executive Director since 2009

5. Mr Noel Condon Chief Executive Officer, Chartis Australia Insurance Limited Non-Executive Director since 2011

6. Mr Heinrich Eder Managing Director, Munich Holdings of Australasia Pty Limited Non-Executive Director since 2005

7. Mr Colin Fagen Chief Executive Officer, QBE Insurance (Australia) Limited Non-Executive Director since 2011

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The directors of the Company at any time during the 2012 calendar year were:

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9 11

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DIRECTOR APPOINTMENTS DURING 2012:

8. Mr Andy Cornish Chief Executive Officer, Direct Insurance, Insurance Australia Group Limited (Appointed 2.2.12)

9. Mr Adrian Humphreys Australian Country Manager, Lloyd’s Australia Limited (Appointed 3.5.12)

10. Mr Mark Senkevics Managing Director and Head of Australia and New Zealand, Swiss Reinsurance Company Limited (Appointed 3.5.12)

DIRECTOR RESIGNATIONS DURING 2012:

11. Mr Shane Doyle Chief Executive Officer, Zurich Financial Services Australia Limited Non-Executive Director since 2011 (Resigned 30.6.12)

12. Mr Mike McCarthy Chief Executive Officer, RAC Insurance Proprietary Limited (Resigned 17.12.12)

13. Mr Terry Towell Managing Director, Allianz Australia Insurance Limited Non-Executive Director since 1999 (Resigned 31.12.12)

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8 CALL TO ACTIONWith the insurance industry and dozens of communities across Australia still reeling from the most disaster-packed year in memory, the last thing anyone could have wanted was more extreme weather.

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Yet it wasn’t long before huge swathes of Australia’s east coast were again inundated.

By the middle of January, north Queensland was drenched, with emergency services active in areas including Townsville, Ingham and Innisfail. It was only a taste of what was on the way.

In the days leading up to Australia Day, a monsoonal trough hovered over central and southern Queensland. Heavy rainstorms struck southeast and southwest Queensland and northern New South Wales. Creeks and rivers started to rise. Many towns and regional centres that were still struggling to recover from 2011 were again facing the heartache and financial impact of storms and floods.

By January 25, nearly a week of heavy rain had resulted in flooding across large areas of Queensland, from the Sunshine Coast hinterland through the Glass House Mountains to Brisbane, the Gold Coast and into northern NSW.

Emergency services were kept busy responding to nearly 1000 calls for assistance for storm damage and inundation, as well as 26 rescues from floodwaters.

The ICA activated its disaster hotline and announced that policyholders who had experienced damage could expect a swift response from their insurers. Member companies geared up for a sharp increase in inquiries and claims.

Left: Australian Army Kiowa helicopters assess the damage to St George, Queensland (ADF)

Above: Residents pass the time in front of their flooded home in Numurkah, Victoria (The Age)

Much of the biggest impact was being felt further inland, where rivers rose rapidly and some towns braced for their second or third floods in only two years.

On February 4 the ICA declared its first catastrophe of the year. It centred on the south west, including the towns of Roma, Mitchell, Charleville and St George.

Roma, 515km inland from Brisbane, in particular was badly affected. It experienced its worst flooding in history, beating the record set only two years earlier and having just started recovering from floods in 2011. More than 440 homes were inundated.

St George, too, flooded for the third time in three years. Charleville experienced its fifth major flood in two decades. Mitchell experienced its worst flood on record, with several dozen homes affected by floodwaters.

Though some communities in northern NSW were also affected, damage in those areas was comparatively light and insurers continued to monitor the situation.

The ICA sprang into action, liaising with local and state governments and their agencies and activating its disaster

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response team. Member companies sent customer response teams into affected towns, and the ICA embarked on visits to recovery centres to help manage issues and provide guidance to affected residential and business policyholders.

As assessors started moving into the flood-damaged towns, Australian consumers were hearing messages about the importance of another form of insurance.

In mid February, Brisbane-based budget airline Air Australia plunged into administration. Unable to pay for fuel for its flights, it left 4000 travellers stranded overseas.

The ICA was active in local and overseas media, providing guidance about the steps insured travellers should take to see if they were covered for the collapse of the airline and the losses they may have incurred.

The impacts of US Hurricane Sandy and Cyclone Evan late in the year also generated public interest in the importance of travel insurance.

By early March, severe weather was again making its presence felt. Insurers monitored flooding and storm damage across five states and territories following record rainfall, and the ICA provided advice to property owners about recovering from inundation.

It was the second-wettest March in NSW on record. The rain fed into dozens of river systems, which started affecting communities from Broken Hill to Sydney and below as they swelled.

On March 8, the ICA declared its second catastrophe of 2012 for widespread areas of NSW and Victoria. It included the NSW Riverina, NSW Central West and northern Victoria.

More than 75 per cent of NSW was under flood warnings, with communities in both states evacuated.

Southern NSW was particularly hard hit as floodwater moved down the Lachlan and Murrumbidgee rivers, bursting the banks. Concerns about whether the levee protecting central Wagga Wagga would cope with the biggest flood since 1974 resulted in evacuations, though the levee bank did hold. However, many homes in North Wagga, which were not protected, were badly affected.

Forbes was cut in three by floodwaters as the Lachlan River peaked, closing the city’s central business district for several days.

In the north west the Darling River made its presence known, swelling from rain that had fallen in Queensland and NSW over previous weeks. Communities around Bourke were badly affected.

Torrential rain caused inundation and water damage across western Sydney, with Warragamba Dam reaching full capacity and starting to spill.

Northern Victoria was also hit by severe flooding. The Murray and Kiewa rivers and other systems reached major flood levels, with some areas experiencing their worst floods in a century. Floodwaters cut off many communities, including Numurkah and Nathalia. Hundreds of properties were inundated and the Numurkah hospital was evacuated. Other affected communities included Katamatite, Jingellic, Naring and Muckatah.

Insurers and the ICA continued their work, liaising closely with local governments across Queensland, NSW and Victoria, and working with state government agencies and relief organisations to assist affected policyholders. The ICA attended recovery centres in all three states and its disaster hotline handled hundreds of inquiries. Insurance assessors started entering affected areas as soon as waters started to recede.

The final tally was significant, though not as bad as 2011’s bill. Insurance losses from the Queensland flood catastrophe totalled $131.43 million from 10,000 claims. The NSW and Victorian catastrophe resulted in losses of $131.89 million from almost 14,000 claims.

Top: ICA Special Risks Manager Laurie Ratz, Wagga MP Daryl Maguire and NSW Government recovery co-ordinator Ross O’Shea discuss flood recovery (The Daily Advertiser)

Above: Volunteers unload sandbags at Nathalia, Victoria (News Ltd/Newspix)

Right: A flooded part of North Wagga (ADF)

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In comparison the insurance bill from 2011 was about $5.4 billion from more than 275,000 claims. The Queensland floods alone was nearly $2.4 billion of that total, with Cyclone Yasi contributing $1.4 billion and Melbourne’s Christmas Day storms causing $728 million in insured damage.

In a positive step for property owners in flood-prone regions, and after 18 months of negotiations, the Federal Government enacted regulations that introduced a standard definition of flood. Though it applied from July 1, and insurers have two years to introduce it, many insurers had already adopted the definition.

The standard definition of flood is:

> the covering of normally dry land by water that has escaped or been released from the normal confines of:

> any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or

> any reservoir, canal, or dam.

The ICA first proposed a standard definition in 2008 but it was rejected on anti-competition grounds by the Australian Competition and Consumer Commission.

To help the Australian Government monitor consumer choices concerning the purchase of residential flood insurance, in 2012 the ICA started collating data and supplying it each quarter to Treasury.

Data for the June quarter showed nearly four in five Australian household insurance policies contained flood insurance cover, and by December this had passed 80 per cent.

The data demonstrated flood insurance was available to all residential property owners in a variety of formats, and consumers were much more aware of flood cover. It showed consumers were making well-considered choices about their risks and requirements.

Australia was also reminded of other natural hazards during the year. An earthquake that struck Victoria’s Gippsland region in June was felt in Melbourne, though damage was minor. A large number of bushfires and grass fires in several states late in the year provided warnings to property owners to prepare for a summer of high fire risk, with large fuel loads having built up following several wet seasons.

Though insurers responded strongly to extreme weather in late 2011 and early 2012, the industry was still under intense scrutiny from governments and the media.

With premiums rising across Australia, the ICA started the year by addressing concerns about the affordability of insurance in flood-prone regions of Australia.

It reiterated its position that direct, short-term government subsidies to high-risk property owners were the best mechanism to address flood insurance affordability issues. However, investments in permanent mitigation were urgently required to address the root causes of flood damage.

The ICA also pointed out the impact that a global reassessment of Australia’s risk was having on the price of reinsurance, plus a strong shift by some insurers to individual risk rating where it could be supported by data.

In late February, the House of Representatives Standing Committee on Social Policy and Legal Affairs, chaired by Queensland Labor MP Graham Perrett, issued a report into the operation of insurers during disasters. The report, In the Wake of Disasters, made a series of recommendations stemming from the experiences of some property owners in 2011.

The ICA and member companies had given evidence on the operation of the industry during the 2011 disasters,

Representatives from the ICA’s Policy Risk and Disaster Planning team attended 12 community meetings to help policyholders following natural disasters

1312and most of the key recommendations of the Perrett report had by this time already been enacted by either the insurance industry or the Federal Government.

This included improvements to the General Insurance Code of Practice, and work to establish a standard definition of flood and key facts sheets to accompany product disclosure statements.

Responding to the report, the ICA reiterated that existing dispute resolution processes had proven robust and effective, and further government and regulator intervention was not necessary.

However, the ICA also noted the report had neglected to identify actions that governments could take to reduce the impact of severe weather events on at-risk communities and improve the affordability of insurance, in particular investing in permanent mitigation.

In mid March, the Queensland Floods Commission of Inquiry issued its findings and recommendations stemming from the 2011 flood disasters and fatalities. The report noted the pressure the insurance industry had been under and that it had performed well under the circumstances.

The ICA was pleased the Commission had identified the need for substantial improvements in the collation of flood mapping and data across the state, including the need for it to be available to the public.

Responding to the findings, the ICA supported this initiative as one that could be adopted nationally, with all data centralised with Geosciences Australia as announced in 2011 by Federal Financial Services Minister Bill Shorten.

On March 22, the Standing Committee on Social Policy

and Legal Affairs issued a second report into residential strata insurance. The inquiry was established following widespread complaints and campaigning by strata property owners in tropical Queensland, who had experienced sharp rises in their premiums over the past couple of years. The ICA and member companies gave evidence to this inquiry.

In the Wake of Disasters Volume Two: The Affordability of Residential Strata Insurance recommended the Queensland Government introduce a moratorium on stamp duties on strata insurance premiums in north Queensland to help address cost issues.

Among other recommendations, it called for further investigations into insurers’ risk assessment methodologies and an improvement in the information available to assist consumers in managing their strata title insurance.

The ICA welcomed the call for stamp duty relief, arguing the moratorium should apply to the whole state as the first step towards abolishing taxes on insurance in Queensland and all other states and territories.

As part of its response the Federal Government announced the Australian Government Actuary would examine pricing issues in North Queensland strata

Left: Numurkah siblings Stephanie and Daniel Johansson use alternative transport in front of their flooded home (News Ltd/Newspix)

Above: A stranded Air Australia traveller in Phuket waits for news on getting home (AFP)

Right: Soldiers help flood victims near Charleville, Queensland (ADF)

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insurance. The ICA and its members provided evidence, including historic data.

To assist consumers, the ICA developed strata title information sheets that explained the way strata title insurance operates and the fact premiums were rising to reflect the real risks to strata developments.

In October, the AGA released its report. It found no evidence of improper pricing by insurers and competition remained in the market.

The report said market conditions were more likely to attract new insurers to the region. It supported the evidence insurers provided to the House of Representatives committee early in the year, which showed insurers were readjusting their prices to cover underlying technical risks after many years of underpricing, rising reinsurance costs and the impact of natural disasters.

To improve stakeholder understanding of strata title insurance issues in northern Australia, in November the ICA commissioned a research program from North Queensland’s James Cook University aimed at identifying the key exposures in strata-titled property in tropical regions that may be causing insurable losses.

This research, which is expected to be finished by March 2013, will examine strata properties of varying ages and building standards that have had insurance claims during the past decade. It will quantify their vulnerabilities and make appropriate recommendations about reducing the risks in similar properties.

The ICA believes the results of the research will be useful to strata insurers who need to assess the risks to individual buildings. It should also be applicable to property owners and body corporates who may subsequently undertake engineering assessments of their own properties to detect vulnerabilities and to apply suitable remedies.

Throughout the year, the ICA worked to raise awareness of the need for at-risk communities to adapt to extreme weather through mitigation, better land-use planning and improvements to building codes.

In April, the Productivity Commission issued a draft report into climate change adaptation that broadly supported these goals, and the ICA’s 10-point plan to tackle natural disasters (released in January 2011).

In particular, the ICA noted draft recommendations that governments should not subsidise premiums for household or property insurance and that state and territory taxes were a barrier to adapting to extreme weather. The final report is due in early 2013.

Following briefings in November and December from the Bureau of Meteorology, the ICA embarked on a media campaign to make consumers aware of the risks they face during the 2012-13 summer.

The ICA’s disaster team held face-to-face meetings with almost 400 people

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END IN SIGHT FOR UNFAIR TAXESFinally, after more than four decades, the end is in sight for one of Australia’s most regressive and unfair taxes – Victoria’s Fire Services Levy (FSL).

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END IN SIGHT FOR UNFAIR TAXES

The FSL, which is applied to building and contents insurance premiums based on each insurer’s anticipated market share each fiscal year, funds the state’s fire services. Though the abolition of the insurance statutory contributions system was flagged in 2011 the Victorian Government, through several key announcements during the year, confirmed its plans to replace it with a property-based charge on July 1, 2013.

In doing so, the government was implementing a key recommendation from the 2009 Bushfire Royal Commission. Abolishing state taxes on insurance premiums was also recommended by the Commonwealth’s Review of Australia’s Future Tax System (the Henry Review).

The ICA has campaigned for the abolition of the FSL for many years. It has argued the levy is unfair, inequitable and lacks transparency because all property owners, not only those who adequately insure, should contribute towards funding the state’s fire services.

The current system means insured property owners pay the FSL, which then attracts additional stamp duty and GST, significantly affecting the cost and potentially acting as a deterrent to purchasing insurance. The FSL levy, though not a fixed rate, typically adds about 20 per cent to the base premium of the average Victorian metropolitan home and contents policy, and 35 per cent to regional household policies.

However, uninsured property owners do not make a contribution to funding the fire services despite receiving their protection. The Bushfires Royal Commission found this system to be flawed, unfair and in need of reform. It recommended that existing insurance-based arrangements be replaced with a direct property levy.

Building on a number of submissions, expert reports and briefings provided in 2011, the ICA’s Economics

and Taxation Policy directorate continued to work with the Victorian Treasury on transitional arrangements that would be satisfactory to consumers, insurers and the government.

Though the details of the transition from an insurance levy to a property-based charge were not available at the time of the Victorian Budget, the 2012-13 Budget showed a reduction in insurance contributions of almost 10 per cent from 2011-12 ($642 million) to 2012-13 ($581 million), which the ICA believes will help smooth the transition to the new system.

In August, the government announced its reform package. From July 1, 2013, insurers will no longer collect a levy. Instead, the new Fire Services Property Levy will apply to all real property (land and buildings) and will include a fixed component as well as a variable charge assessed on the capital improved value of the property. The levy will be collected by local councils as part of the rates notice.

To ensure a smooth transition, the ICA supported the appointment of the former Chairman of the Australian Competition and Consumer Commission, Professor Allan Fels AO, as the Fire Services Levy Monitor. His team was charged with providing information to consumers, investigating any complaints relating to collection of the FSL, and monitoring the industry to ensure insurers would pass on the abolition of the existing levy to policyholders. Large penalties would apply to any company caught engaging in price exploitation.

Left and above: Reforms to the Fire Services Levy will change the way Victoria funds its fire services, ensuring all property owners share the financial load (News Ltd/Newspix, AAP)

1716 Following the reform announcement, the ICA’s Communications directorate was active in the media, helping to explain the reasons for the shift to a property-based charge. It also explained that insurance companies were still required to meet their statutory obligations to the fire services and had to collect the required amount from their policyholders up to June 30, 2013.

The ICA pointed out that the FSL collected in the 2012-13 fiscal year would fund the fire services for that year alone, and not for the 2013-14 year, which is when the new property-based charge would take over.

Another source of confusion addressed through the media was the amount insurers would collect from each policyholder before July 1, 2013. The ICA stated that collections were an individual commercial decision for insurers, and unlike GST or stamp duties, a policyholder’s FSL was not a fixed statutory rate. It advised consumers that they could shop around for the best deal on all aspects of their insurance premium, including the FSL.

Victoria’s FSL reforms mean that from July 1 next year, only one mainland state will rely on a levy on insurance policies to pay for its emergency services.

However, the ICA was delighted that in 2012 the New South Wales Government embarked on its own path towards substantive tax reform.

In July NSW Treasurer Mike Baird released a discussion paper on improving the funding of the state’s emergency services − including Fire and Rescue NSW, the NSW Rural Fire Service and the NSW State Emergency Service − and

embarked on a three-month consultation program to identify appropriate reforms.

At present, NSW emergency services are about 75 per cent funded through an Emergency Services Levy on insurance policies – in effect, a tax on insurance that makes policies less affordable and acts as a disincentive to property owners taking out appropriate cover.

Based on a notional emergency service levy rate of 21 per cent, a NSW householder with a typical annual residential home and contents policy of $1000 pays $210 each year in ESL. This is further compounded by the addition of stamp duties and GST.

The ICA had previously submitted Deloitte Economics research to NSW Treasury that examined the distributional impacts of replacing the ESL with a property-based charge. In response to the discussion paper the ICA submitted evidence to highlight the weaknesses and unfairness of the current system and support the need for

In 2011-12, insurance companies contributed $1.3 billion to the Victorian and NSW fire and emergency services

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Far left: Insurers will continue to collect the FSL until July 1, 2013 (News Ltd/Newspix)

Above: Prime Minister Julia Gillard meets Marion Trabe-Templeton and daughter Lucy during an NDIS rally in Sydney (AAP)

Left: Fire Services Levy Monitor Professor Allan Fels (News Ltd/Newspix)

reform. It also outlined transitional pathways adopted in other jurisdictions or recommended by various reports.

Though the NSW Government has not made a decision on ESL reforms, the ICA continues to discuss the design, scope, features and transition arrangements to a new levy, and believes further announcements will be made in 2013.

The Henry Tax Review also recommended the abolition of state stamp duties on insurance products, and in June the ACT Government announced it would phase out its 10 per cent stamp duty over five years, starting from October 1.

This made the ACT the first state or territory government to remove stamp duties on all general insurance products, proving reform of state insurance taxes is achievable.

However, in October the Tasmanian Government took a step backwards, increasing its stamp duty rate.

The ICA believes it is feasible for all state levies and stamp duties to be removed by 2015. This could be achieved by establishing a national payroll tax that required states to abolish their taxes on insurance, in exchange for the removal of the requirement for them to pay for disability services.

In April, the ICA published a report on how such a tax could be used to fund a National Disability Insurance Scheme (NDIS). This option would serve to meet the Productivity Commission’s recommendation that the states be relieved of their disability funding.

The report also examined the advantages and disadvantages of other funding options for the NDIS,

including: increasing personal income tax, increasing the GST rate, and reintroducing fuel excise indexation.

In May, the government announced in its Federal Budget, it would allocate $1 billion to the NDIS over the next four years, with the funding coming from consolidated revenue. The Productivity Commission has estimated it will cost $13.5 billion to roll the scheme out nationally.

The ICA is also closely involved in discussions on the introduction of a National Injury Insurance Scheme (NIIS). The aim of the NIIS is to reduce inequities in lifetime care and support across Australian states and territories, for people suffering catastrophic injuries. Work to establish the NIIS is progressing.

The ICA and general insurance industry will continue to work with government and stakeholders to offer input and support the development of these schemes, and is monitoring developments in a state tax reform plan being conducted by state treasurers.

In the five years to 2011-12, insurer contributions to the FSL and ESL soared by more than 60 per cent, compared with a CPI rise of about 15 per cent

2012 EVENTS

The Insurance Council’s 2012 event calendar supported and enhanced much of the work undertaken throughout the year by the ICA’s board, executive and staff, and more than 50 committees and working groups.

The industry events started on February 22 with the annual Regulatory Update, which was held at the Sydney

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2012 Regulatory Update, 2012 Annual Dinner, 2012 Canberra Cocktails and Treasury Luncheon

Convention and Exhibition Centre. Though scheduled earlier in the year than in previous years it was very well supported by the industry and attracted about 270 delegates, many of whom travelled interstate to attend.

The full-day seminar covered crucial ground in the regulatory area while considering the views of industry regulators. It

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examined the industry’s response to the catastrophes of 2011, managing prudential capital requirements, equitable access to insurance, the National Injury Insurance Scheme, and the General Insurance Code of Practice.

Keynote and plenary speakers included ICA President Rob Scott; ICA CEO Rob Whelan; Catriona Lowe, Co-CEO, Consumer Action Law Centre; John Price, General Insurance Ombudsman, Financial Ombudsman Service; Helen Rowell, Executive General Manager, Supervisory Support Division, Australian Prudential Regulation Authority;

and Peter Kell, Commissioner, Australian Securities and Investments Commission. The Minister for Financial Services and Superannuation, The Hon. Bill Shorten MP, was unable to attend but provided a video message outlining his view of the relationship between the government and the insurance industry, and some of the challenges ahead.

Throughout the forum insurers, regulators and the Federal Government pledged to continue to build on relationships developed during last year’s unprecedented series of natural disasters.

2012 EVENTS

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On May 3 the ICA’s Annual Dinner returned to the Westin Hotel Sydney, attracting more than 370 guests and VIPs. Members and their guests, members of parliament, government officials, and senior industry representatives heard speeches from Mr Scott and Mr Whelan about the industry and its achievements and were entertained by comedian Joel Ozborne and live band Jazz Nouveau.

A highlight of the evening was the keynote presentation by Edge Environment Director Tom Davies. Mr Davies

introduced the Building Resilience Rating Tool, which his organisation is developing on behalf of the ICA. The tool is designed to help educate the community about the vulnerability of their properties, and how to improve the built environment to be more resilient to extreme weather. It is expected to be further developed and refined in 2013.

On August 22, board members and senior executives from the ICA and member companies gathered in Canberra for the annual Treasury Luncheon at the Hyatt Hotel. The event provided an informal environment for members to

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meet key federal representatives and was well attended by 65 bureaucrats from key government departments and agencies, including Departments of Treasury, Attorney-General, Health and Ageing, Foreign Affairs and Trade and Finance.

Following the luncheon the ICA hosted a cocktail evening at Parliament House. The Minister for Financial Services and Superannuation, Mr Bill Shorten MP, congratulated the industry on the progress it had made following the natural disasters of 2011, including the introduction

of a standard definition of flood and strengthening the General Insurance Code of Practice. He discussed the development of a key facts sheet to accompany policy documents, insurance affordability, and improving access to insurance for seniors.

More than 130 guests attended, including federal Ministers and their advisers, Shadow Ministers, other Members of Parliament, ICA Board members and senior representatives from ICA member companies. Many journalists from the Canberra Press Gallery were also in attendance.

These include working closely with consumer advocates and Treasury officials to reach a consensus on amendments to the Insurance Contracts Act; providing industry input to the final requirements for a Key Facts Sheet for home and contents policies; managing a range of anti-discrimination issues; organising dialogue with the Australian Prudential Regulation Authority (APRA) on implications of changes to capital requirements flowing from the Life and General Insurance Capital (LAGIC) review; and supporting the establishment of the Global Federation of Insurance Associations (GFIA).

Australia already benefits from a very effective domestic regulatory regime, with insurers subject to stringent legal requirements under the Corporations Act 2001, Insurance Act 1973, Insurance Contracts Act 1984 and Competition and Consumer Act 2010. However, following the global financial crisis, there has been a concerted push internationally to tighten prudential legislation to avoid a future collapse.

Given the size of the Australian economy and its need to attract capital, it is difficult for Australian regulators to resist global initiatives. By signing up as a founding member of the Global Federation of Insurance Associations (GFIA), the ICA has been able to leverage the efforts of industry associations around the world to push back against unnecessary regulation.

The GFIA is unique in that it is the first time a formal global federation of the world’s insurance associations has been created. Membership allows the ICA to provide the Australian industry with a voice in international matters.

For example, two key projects of the International Association of Insurance Supervisors (IAIS) are being

Internationally and domestically, the Insurance Council of Australia’s Regulatory Policy team has made strong progress in many significant regulatory challenges, some of which have been finalised or close to finalisation after running for almost a decade.

LEADING THE WAY ON REGULATION

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Above: Foundation members of the Global Federation of Insurance Associations meet in Washington, DC. (GFIA)

Opposite page: Financial Services Minister Bill Shorten

examined by the GFIA. These are the identification and establishment of additional regulatory requirements for Global Systemically Important Insurers (G-SIIs), and the development of a common framework for the supervision of Internationally Active Insurance Groups (ComFrame).

It is unclear whether any ICA members would be classed as G-SIIs, and it is thought unlikely the implementation of ComFrame in Australia will require major regulatory change, given the rigorous regime already in place.

However, there are questions about whether, as in banking, regulators will be required to apply additional measures to Domestic Systemically Important Insurers (D-SIIs) – a category that would include some ICA members – and what the implications would be to the Australian regulatory environment of a global solvency standard, a possibility under the ComFrame framework.

23

Insurance industry associations face many of the same issues across the world, in particular the internationalisation of regulations and financial standards. As part of the GFIA, the ICA is able to provide direct input on these initiatives, placing the Australian insurance industry at the forefront of global regulatory development.

As well as helping to steer international regulatory decisions through its membership of the Global Federation of Insurance Associations (GFIA), the ICA is working closely with the United Nations Environment

Program’s (UNEP) Principles of Sustainable Insurance initiative (PSI).

The PSI initiative was launched in June 2012 in Rio de Janeiro, Brazil, to support the aims of the UN Conference on Sustainable Development. This is a global framework for insurance companies to better manage environmental, social and governance risks and opportunities in their core business strategies and operations.

The ICA was pivotal in helping to develop the PSI and was part of the global consultation process that was carried out by the UNEP in 2011. It is a signatory and founding supporter of the program.

In December, ICA CEO Rob Whelan met Butch Bacani, Head of the PSI initiative. During their meeting they

discussed promoting mitigation, preparing for extreme weather events and the ICA’s work in developing a building resilience rating tool and financial literacy project, Understand Insurance.

They also discussed the emergence of microinsurance products to help support businesses and individuals in developing countries.

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Above: Butch Bacani, head of UNEP’s Principles of Sustainable Insurance initiative, meets ICA CEO Rob Whelan

The Regulation Directorate coordinated more than 79 policy and regulatory committee meetings, and attended 19 meetings with industry regulators including ASIC and APRA

Domestically, the catastrophes of 2011 put the regulatory environment that Australian insurers operate within under the microscope.

The industry listened to calls for changes to the General Insurance Code of Practice and the level of consumer protection it provided, and in February the ICA Board approved changes to the Code as part of the industry’s commitment to improving customer service standards.

The key changes provided clearer timeframes for claims handling, including during declared catastrophes, and took effect on July 1. The Board also agreed to bring forward the triennial independent review of the Code of Practice by one year, and in May, Mr Ian Enright, a financial services lawyer with more than 25 years’ experience, was appointed to head the 12-month review.

Early in the year the ICA reviewed the draft report from the Queensland Floods Commission of Inquiry and provided comments to the Commissioner, Justice Catherine Holmes, about how the industry had responded during the disaster. The ICA supported many of the recommendations when the final report was released in March, including the need for improvements to the collation of flood mapping and data.

Financial Services Minister Bill Shorten’s consultation paper Reforming Flood Insurance: Clearing the Waters put forward a proposal to introduce short and simple key facts statements for home and contents policies to help make policyholders aware of what their insurance covered.

The ICA supported the proposal and provided input on design and content to Treasury, including a draft of what the form might look like.

In its submission to the Federal Government, the ICA argued that the Key Fact Sheet should be used as a tool to help consumers determine which policies they would like more information on, and made it clear it should not be used as a substitute for product disclosure statements.

In order to facilitate the updating of the Insurance Contracts Act, particularly to give certainty to the electronic provision of notices (which the ICA believes offers significant benefits for customers and insurers) the ICA worked closely with consumer advocates and Treasury to discuss remaining concerns with the proposed amendments.

These matters were resolved, with the ICA participating in a consultation on the draft Amendment Bill in November.

The ICA also participated in discussions with its stakeholders to identify how to apply a remedy for Unfair Contract Terms to general insurance contracts. This helped to create a better political atmosphere for passage of the Amendments Bill.

Throughout 2012, the ICA was actively engaged in Minister Shorten’s Insurance Reform Advisory Group. The group is examining the issues of travel insurance and seniors, the availability of insurance for those with a mental illness.

The ICA responded to a discussion paper issued by the Australian Law Reform Commission inquiry into the barriers to work facing senior Australians. Discussions across all of these issues are ongoing.

The ICA is also in discussions with the Tasmanian Anti-Discrimination Commissioner on the availability of insurance for volunteers.

The ICA looks forward to continuing to engage with stakeholders across these areas to see whether there are ways of improving access to insurance for higher risk groups while ensuring that underwriting remains prudent.

25Above: Then-Queensland Premier Anna Bligh receives a copy of the final flood inquiry report from the Commissioner, Justice Catherine Holmes (AAP)

2726

The most significant development took place in New South Wales, where the ICA was involved in historic changes to the state’s workers’ compensation scheme.

ICA members (insurers and reinsurers) are involved in workers’ compensation schemes as insurers or as scheme agents. In NSW, the ICA members that act as scheme agents are Allianz, GIO, QBE, CGU and Employers Mutual. These companies issue and administer policies on behalf of WorkCover, and premiums are calculated according to a formula determined by WorkCover. Claims are managed in

CONTRIBUTING TO COMPENSATION SCHEME REFORMAccident compensation schemes underwent some considerable changes in 2012, with the Insurance Council representing its members’ interests in changes to workers’ compensation and compulsory third-party motor insurance in jurisdictions across Australia.

accordance with guidelines set down by WorkCover, and compensation is paid to injured workers based on benefits prescribed under legislation.

In February, the NSW Government announced it would fast-track scheme reforms. It established a Joint Select Committee to investigate the effectiveness of the scheme, and whether it remained sustainable after the Coalition inherited a deficit estimated at $4.1 billion. Investigations by the government found workers’ compensation premiums would need to rise significantly for the scheme to come out of debt.

2726

In May, an ICA and industry representative appeared at the committee hearing. During its appearance, the ICA acknowledged the need for comprehensive reforms to address the deteriorating performance of the scheme. It stated a proper financial analysis should be conducted of any reform proposals to allow the NSW Government and other stakeholders to make informed decisions about the proposed reforms.

Proposed changes to the scheme were rejected by UnionsNSW and the NSW Greens, which openly criticised the review and claimed insurers would be the only ones to benefit from the changes. The ICA refuted the assertions, highlighting that insurers were appointed as scheme agents, and did not insure or underwrite the scheme.

In fact, ICA members issue workers’ compensation insurance policies, determine and collect insurance premiums, manage workers’ compensation claims, provide support for injured workers, pay benefits to injured workers and manage any third party service providers such as medical or rehabilitation services.

Following the review, in June, the NSW Government passed reforms through Parliament as the Workers Compensation Legislation Amendment Bill 2012.

One of the ICA’s objectives is to seek the harmonisation of the benefits and scheme design for workers’ compensation and compulsory third-party insurance so that injury management and compensation systems operate on a stable, predictable, affordable and nationally consistent basis, for the benefit of insurance consumers, injured persons and their families.

The ICA has commenced consideration of economic arguments to demonstrate the benefits of private underwriting for government and key stakeholders. This work will be progressed next year.

ICA members underwrite workers’ compensation schemes in Western Australia, the Northern Territory, Tasmania and the Australian Capital Territory, and are scheme agents for workers’ compensation schemes in Victoria and South Australia.

The Queensland scheme is run entirely by the state government. However, this is under review. In September, the ICA made a submission to the Queensland Government on the operation of its scheme. The ICA stated the scheme could be more effectively delivered by the private market, and highlighted how this would enhance regulatory effectiveness, and improve social and financial outcomes.

The ICA submitted that Australia’s robust regulatory regime meant insurers were required by law to hold more than sufficient capital to ensure a privately underwritten scheme is fully funded. It said the private sector’s

involvement would enhance innovation, improve fairness to employers, and deliver improved claims handling, and a move to a private scheme would transfer the risk burden away from taxpayers to insurance companies.

In November, the ICA attended a Queensland Parliamentary hearing into the scheme as an observer. Some ICA members appeared as witnesses and highlighted the benefits of opening the scheme to the private market.

Also that month, the ICA wrote to the NT Government following a call for submissions in relation to the NT Workers Rehabilitation and Compensation Legislation Amendment Bill 2012. The ICA raised a number of concerns with the Bill, especially with regard to overseas workers and non-cash benefits.

The ICA’s submission supported changes to the definition of “worker” in the Bill, on the grounds it increased access to workers’ compensation insurance to a greater number of people, and it also supported the proposed changes for older workers. The NT Government is considering the issues.

ICA members also underwrite motor accident schemes in NSW, Queensland and the ACT, while a member of the ICA is the claims agent for the SA motor accidents scheme.

In NSW the Compulsory Third Party (CTP) scheme is principally fault-based. However, the NSW Government has issued Terms of Reference for a CTP Pricing Review. The ICA and its members support the NSW Government’s CTP scheme reform process, and its goals of addressing scheme affordability and sustainability.

The ICA notes that the final form of the NSW CTP scheme is a matter for the NSW Government. The industry looks forward to working with the Government on the details of any scheme reforms.

The insurance industry is an important partner in managing personal injury recovery and driving personal injury prevention through education and risk pricing. The ICA and its members continue to work to assist state and territory governments in the delivery of affordable, efficient and sustainable accident compensation schemes.

There were 16.7 million compulsory third party motor vehicle policies in Australia as at December 2012

Left: News Limited/Newspix

The Insurance Council’s communications directorate embarked on a fresh media strategy in 2012 that emphasised transparent and proactive engagement on core issues.

RENEWED FOCUS ON MEDIA ENGAGEMENT

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This followed unprecedented focus on the behaviour of the general insurance industry by journalists, commentators, governments and consumer groups throughout 2011’s series of natural disasters.

At the beginning of the year, the directorate was expanded and restructured and a fresh strategy was developed. This embraced a proactive media engagement agenda designed to help promote the value of insurance, and help rebuild and strengthen the industry’s image and reputation with governments, media and consumers. It was also designed to make the ICA a trusted source of information.

Throughout 2012, the communications team remained on the front foot, with response times to most media inquiries cut to within an hour, day or night, seven days a week. The team also generated more proactive stories, reinforcing key industry messages to the benefit of the ICA and its members.

This approach paid dividends. The ICA and its members started to observe an increasing proportion of fair and balanced coverage, and many journalists and channels previously regarded as negative began looking at core insurance issues with a more nuanced and informed perspective.

Social media channels offered another way for the ICA to connect with the public, and helped identify key issues and address community concerns.

The ICA’s Twitter account @ICAUS became an integral communications channel, and was used effectively and efficiently to monitor issues and present the industry’s views without a traditional media filter.

By the end of the year, the ICA had more than 600 followers and had tweeted nearly 400 times on a diverse range of insurance issues.

The communications team also established a social media presence on YouTube, and by the end of the year the ICA’s channel hosted nine videos, which have been viewed more than 400 times.

Over the year the ICA issued 54 media releases and handled more than 600 media inquires, including radio and television interviews across all mainstream media, and inquiries from national, state and local media outlets.

The ICA was quoted in more than 4360 print, radio, TV and online media reports. Communications General Manager Campbell Fuller served as the main

spokesperson for the ICA, with CEO Rob Whelan, General Manager Policy Risk and Disaster Planning Karl Sullivan, and General Manager Policy Economics and Taxation Alex Sanchez also taking part in interviews.

Key media issues included the industry’s response to the east coast floods early in the year, the 2011 catastrophes and their ramifications, landmark changes to the NSW Workers’ Compensation scheme, the introduction of a standard definition of flood, reforms to the Victorian Fire Services Levy, premium increases and affordability.

At the start of the year the ICA launched its new-look corporate website with improvements in site functionality, design, and navigation.

The redesign incorporated fresh and updated content to improve the experience of visitors to the website and promote openness and transparency of the ICA’s activities. Its new layout embraced modern web design and usability best practice.

In a typical month the website received 10,000 visitors. It is often the first place that consumers, the media and other stakeholders turn to for information. In 2012 there were:

> 124,513 website visits (11,000 of these were from a mobile device)

> 429,791 page views, with visitors viewing 3½ pages on average each visit

> An average visit duration of two minutes 40 seconds

Part of the media strategy included social engagement with the media. A schedule of events allowed journalists and industry representatives (including communications professionals and board members) to understand each other’s perspectives and develop relationships in a relaxed and informal environment.

The ICA also began work on Understand Insurance, a consumer financial literacy project intended to raise consumer awareness about the importance of insurance and provide customers with the resources to make informed decisions about the products they require. It is expected to launch next year.

The ICA communications team handled more than 600 media inquiries from print, broadcast and online media outlets

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Left: ABC TV interviews ICA CEO Rob Whelan

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FIND AN INSURERHELPS CONSUMERSOn July 1, 2012, the Insurance Council launched a service to help consumers find insurers that offer the products they need.

Find an Insurer replaced a service previously provided by the Financial Ombudsman Service (FOS) and followed extensive consultation between FOS and the general insurance industry.

Find an Insurer’s primary purpose is to guide consumers and does not provide advice of any kind. It enables consumers to conduct a smart search for the type of product they need and receive a downloadable list of insurance companies and brands that offer that product.

Consumers type in the name of a product, for example ‘car’, and are presented with a range of motor insurance product categories including compulsory third party, comprehensive, and third party property damage insurance. Each category then provides a directory of relevant insurers, which the consumer can then use to shop around for the most appropriate policy.

The service also assists ICA member companies to comply with their obligations under the General Insurance Code of Practice to redirect consumers to alternative product providers if they are unable to provide a policy.

Since being launched, the service has expanded to list more than 230 general insurance categories and more than 100 Australian general insurance providers.

Find an Insurer can be accessed through a dedicated website at www.findaninsurer.com.au and also via a hotline operating during business hours.

By the end of 2012 consumers had viewed the online search categories and subcategories 266,833 times. This is an average of 1246 category searches every day. ICA figures show 10 per cent of website visitors throughout the year accessed the site from a mobile

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Travel insurance

24%

Motor vehicles insurance

22%

Building insurance

15%

Business insurance

12%

Contents insurance

6%

Liability insurance

6%

Rural insurance

5%

Motorbikes, scooters and cycles insurance

4%

Marine insurance

3%

Personal insurance

1% Other

2%

46 per cent of consumers using Find an Insurer in 2012 were looking for travel or motor vehicle insurance products

The most popular Find an Insurer product categories searched by consumers in 2012

device. The adoption of modern and responsive website design quickly accommodates new and emerging technology and ensures consumers can access the online service from almost any type of browser or portable device.

In its first six months of operation the hotline 1300 884 934 received more than 17,600 inquiries. On most days the call centre staff handled 70 to 240 inquiries, with 710 calls in a typical a week. Most callers do not have internet access, live in a rural location, are elderly or are seeking a niche product. The call centre provides information identical to that available on the Find an Insurer website.

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Valid and constructive criticisms were aimed at the General Insurance Code of Practice from several sources, in particular the 2011 Natural Disaster Insurance Review.

In response the Insurance Council took important steps intended to address immediate issues and ensure the Code – which ICA members must follow − remained relevant for the industry in the future.

In February the ICA Board approved revisions to the Code as part of the industry’s commitment to the continual improvement of the standard of service it provided to its customers.

These changes included: clarifying the timeframes for claims handling, including during declared catastrophes; providing greater certainty for policyholders on the completion of external expert reports; making external expert reports available to claimants; and providing claimants with the right to lodge a claim to test the question of policy cover.

The changes followed extensive consultation with consumer groups and industry, and demonstrated the ICA and its members were steadfast in continually reviewing the Code’s performance and efficacy. These changes came into effect from July 1, providing policyholders with an even greater level of protection.

The Board also decided that further measures should be taken to enhance the effectiveness, relevance and regulatory status of the Code, and brought forward the triennial Code review by 12 months.

In May, the Board formally appointed a leading financial services lawyer and insurance law academic, Mr Ian Enright, to conduct an independent 12-month review of the Code. Mr Enright has more than 25 years’ experience in insurance law. His appointmented followed extensive consultation with the Federal Government, regulators and consumer organisations.

Mr Enright established a rigorous process. He conducted extensive research, met stakeholder groups, reviewed the recommendations relating to insurance from various government inquiries and reports, and developed an

INDUSTRY KEEPS SELF-REGULATION RELEVANTThe natural disasters of 2011 put the insurance industry’s self-regulation regimen in the spotlight.

issues paper that called for the views of individuals or organisations on possible changes to the Code that would better meet the needs of Australian consumers.

Following the release of the Issues Paper he conducted a series of nationwide consultation sessions to ensure the voices of consumers and other stakeholders were heard. The consultations were promoted in local, regional and national media, and attracted interest from the community.

Mr Enright received a diverse range of submissions from organisations, including the Insurance Law Service (on behalf of key consumer advocates), the National Insurance Brokers Association, and ICA members including Suncorp and Insurance Australia Group.

A detailed report will be presented in May 2013 to the Insurance Council Board. It is expected Mr Enright will make recommendations about a significantly revised Code of Practice.

Ian Enright, Independent Reviewer of the General Insurance Code of Practice

The Issues Paper released by the Independent Reviewer asked 110 questions

ICA EXECUTIVE TEAM

1. Rob Whelan Executive Director and CEO Joined on March 22, 2010

2. John Anning General Manager Policy Regulation Joined on April 2, 2007

3. Brian Francis Company Secretary and General Manager Corporate Services Joined on May 26, 1997

4. Campbell Fuller General Manager Communications and Media Relations Joined on October 24, 2011

5. Paul Giles General Manager Government and Stakeholder Relations Joined on August 4, 2006

6. Vicki Mullen General Manager Consumer Relations and Market Development Joined on January 16, 2012

7. Alex Sanchez General Manager Policy Economics and Taxation Joined on September 5, 2006

8. Karl Sullivan General Manager Policy Risk and Disaster Joined on September 4, 2006

7

1 2 3 4

865

The ICA Executive Team as at December 31, 2012:

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3534

SUBMISSIONS

Consolidation of Commonwealth Anti-Discrimination Laws: Discussion Paper. The ICA supports the consolidation project’s intention to provide clearer and more consistent anti-discrimination legislation, to make it easier for individuals and businesses to understand their respective rights and obligations.

Submission to Assistant Secretary, International Human Rights and Anti-Discrimination Branch, Attorney General’s Department

1/2/12

Inquiry into the Human Rights and Anti-Discrimination Bill 2012 − Exposure Draft Legislation. The ICA supports the inclusion of an insurance-specific exception in the Exposure Draft. The ability for insurers to lawfully discriminate is integral to the assessment of risk and provision of affordable insurance.

Submission to the Committee Secretary, Senate Standing Committees on Legal and Constitutional Affairs

21/12/12

Accessibility and Availability of General Insurance for Seniors. The ICA states it would like to provide further information to highlight the range of products available to senior Australians, and it is keen to continue to improve consumer information to address concerns about insurance accessibility.

Submission to Professor Rosalind F. Croucher, President, Australian Law Reform29/8/12

Proposals Paper: A Modernisation and Harmonisation of the Regulatory Framework applying to insolvency practitioners in Australia. The ICA has no objection to the proposal to align annual practitioner return requirements, or the requirement for practitioners to attach proof of insurance upon their annual renewal of registration.

Submission to the Manager, Governance and Insolvency Unit, Corporations and Capital Markets Division, the Treasury

1/2/12

Discussion Paper: Grey areas − age barriers to work in Commonwealth Laws. The ICA is concerned the Discussion Paper refers to a need for intrusive reform of some aspects of the general insurance industry, including commercial matters. The ICA questions the need for systemic reform.

Submission to Professor Rosalind F. Croucher, President, Australian Law Reform30/11/12

ANTI-DISCRIMINATION

Review of the Insurance Contracts Amendment Bill 2011. The ICA is concerned that in its current form, the Insurance Contracts Amendment Bill would require insurers to clearly inform the insured in writing whether flood cover is provided every time a policy is provided, renewed, varied, extended or reinstated. The ICA and its members believe this is excessive.

Submission to House Standing Committee on Economics19/1/12

Key Facts Sheet (KFS): Home Building and Home Contents Insurance Policies (Discussion Paper). The ICA submits a key facts sheet should be provided whenever a Product Disclosure Statement is required. It welcomes recognition in the discussion paper that the KFS is not a substitute for the PDS.

Submission to Ms Michelle Calder, Manager, Financial Services Unit, Retail Investor Division, Treasury

11/4/12

Unfair Terms in Insurance Contracts − Draft Regulation Impact Statement for Consultation. The ICA submits that the existing regulatory regime for general insurance, focused on the Insurance Contracts Act 1984, provides a strong level of consumer protection that is equivalent to that offered by the Unfair Contract Terms provision of the Australian Securities and Investments Commission Act 2001.

Submission to Ms Michelle Calder, Manager, Financial Services Unit, Market Group, Treasury

28/2/12

Insurance Contracts Amendment Bill 2013. The ICA submission strongly supports the provisions contained in Schedule 2 of the Bill, noting the Electronic Transactions Regulations 2000 will need to be amended to remove the exemption for the Insurance Contracts Act 1984.

Submission to Dr Richard Sandlant, Manager, Disclosure and International Unit, Treasury

12/12/12

Changes to General Insurance Statistical Publications. The ICA strongly supports the changes outlined in the paper and believes the expanded quarterly report will provide for the more timely release of more detailed general insurance statistics.

Submission to Manager, General Insurance Statistics, Australian Prudential Regulation Authority

19/1/12

Consultation Draft: Insurance Contracts Amendment Regulation 2012 (no.), including explanatory Statement and Key Facts Sheet (KFS) examples. The ICA submission includes a draft key facts sheet and explanatory statement. It states a KFS should be a guide only.

Submission to Ms Michelle Calder, Manager, Financial Services Unit, Treasury29/8/12

Insurance Contracts Amendment Bill 2010. The ICA submission sets out the need to establish clearly whether notices required under the Insurance Contracts Act can be provided electronically is important to consumers and insurers. It believes 18 months is insufficient time to enable the general insurance industry to make changes to Product Disclosure Statements and other documents.

Submission to Ms Michelle Calder, Manager, Financial Services Unit, Retail Investor Division, Treasury

29/3/12

INSURANCE CONTRACTS ACT & UNFAIR CONTRACT TERMS

Consultation Feedback on Regulations supporting a Standard Definition for Flood. The ICA raises concerns in relation to the Insurance Contracts Amendment Bill 2011. It is important solutions to achieve a more sustainable approach to flood insurance are addressed in a coordinated process.

Submission to the Hon Bill Shorten MP, Assistant Treasurer and Minister for Financial Services and Superannuation

1/2/12

Natural Disaster Insurance Review (NDIR). The ICA submission states the insurance industry has made important changes to the GI Code of Practice and outlines the ICA’s response to each element of the NDIR.

Submission to the Hon Bill Shorten MP, Assistant Treasurer and Minister for Financial Services and Superannuation

1/3/12

Productivity Commission Draft Report on Barriers to Effective Climate Change Adaptation. Community adaptation to the impacts of extreme weather should be considered a national priority. Insurers are well placed to understand the impacts of extreme weather and the measures that can be taken to reduce vulnerability.

Submission to Commissioner, Productivity Commission, Barriers to Effective Climate Change Adaptation

14/6/12

FLOOD & NATURAL DISASTER

Access to credit repayment history information. The ICA supports the government’s proposed reforms to allow credit repayment history information to be included in an individual’s credit information file as part of more comprehensive credit reporting. Lenders Mortgage Insurance (LMI) providers should continue to have access to the same credit reporting information as credit providers.

Submission to Mr Richard Glenn, Assistant Secretary, Information Law and Policy Branch, Attorney-General’s Department

9/2/12

Credit Licence Conditions − Strict Liability for Record Keeping. The ICA and its LMI members sought an exemption for LMI providers from the record keeping obligations of the National Consumer Credit Protection Act 2009. It states an exemption remains the ICA’s first preference, but it recognises the non-application of the strict liability provisions would be an improvement for members.

Submission to Mr Christian Mikula, Manager Investor Protection and Credit Unit, Treasury

24/4/12

Access to credit repayment history information. The ICA supports the Government’s proposed reforms to allow credit repayment history information to be included in an individual’s credit information file, as part of more comprehensive credit reporting.

Submission to the Hon N. L. Roxon MP, Attorney-General2/3/12

The Credit Reporting (CR) Code of Conduct Independent Review. The ICA highlights the value of Lenders Mortgage Insurance and how it helps first home buyers bridge the deposit gap, which remains an impediment to achieving home ownership.

Submission to Mr Chris Connolly, Independent Reviewer, Credit Reporting Code of Conduct

9/7/12

CREDIT

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LAGIC: Submission on APRA’s response Paper December 2011. The ICA states members raised a number of concerns for consideration by APRA on LAGIC, including the area of Operational Risk.

Submission to Mr Neil Grummitt, General Manager, Policy Development, Australian Prudential Regulation Authority (APRA)

27/2/12

LAGIC: Proposed Revisions to Reporting Requirements. ICA members have identified that it would take costly systems changes to report gross and net figures for the standalone risk margin.

Submission to Mr Neil Grummitt, General Manager, Policy Development, Australian Prudential Regulation Authority (APRA)

5/9/12

LAGIC: Submission on Draft GPS 116. The ICA appreciates the open and constructive dialogue that characterised the workshop on March 13 2012 on draft GPS 116: Insurance Concentration Risk Charge (ICRC).

Submission to Mr Neil Grummitt, General Manager, Policy Development, Australian Prudential Regulation Authority (APRA)

29/3/12

LAGIC: Consultation on Draft Prudential Practice Guides and Information Paper. The ICA and its members identified issues with the draft paper. The submission questions whether APRA’s intention to make comparisons within peer groups is not too heavily influenced by the banking sector.

Submission to Mr Charles Littrell, Executive General Manager, Policy Research and Statistics Division, APRA

20/12/12

LIFE AND GENERAL INSURANCE CAPITAL IMPLICATIONS (LAGIC)

Inquiry into the NSW Workers Compensation Scheme. The ICA acknowledges a framework to comprehensively address the deteriorating performance of the scheme will require fundamental reform and will need to address a wide range of complex factors.

Submission to the Hon Robert Borsak MLC, Committee Chair Joint Select Committee on NSW Workers Compensation Scheme

21/5/12

Operation of Queensland’s Workers’ Compensation Scheme. The ICA states the Queensland scheme can be effectively delivered by the private market with appropriate regulatory oversight. This would enhance regulatory effectiveness, and improve social and financial outcomes.

Submission to the Chair, Finance and Administration Committee, Parliament House, Queensland

3/9/12

WORKERS COMPENSATION

Privacy Amendment (Enhancing Privacy Protection) Bill 2012. The ICA welcomes the opportunity to make a submission to the Senate Standing Committees on Legal and Constitutional Affairs inquiry into the Privacy Amendment (Enhancing Privacy Protection) Bill 2012.

Submission to Committee Secretary, Senate Standing Committee on Legal and Constitutional Affairs

16/7/12

Privacy Amendment (Enhancing Privacy Protection) Bill 2012. ICA members are strongly committed to the protection of the personal information of customers and staff. The ICA is concerned about provisions in the Bill that unnecessarily restrict the ability of LMI providers to access credit repayment data.

Submission to the Committee Secretary, House of Representatives Standing Committee on Social Policy and Legal Affairs

20/7/12

PRIVACY

Legislative Inconsistency between Motor Accidents Act and the Lifetime Care and Support Scheme. The ICA strongly submits legislative change is required to ensure the provision of treatment and care needs to the catastrophically injured is only available through the provisions of the Motor Accidents (Lifetime Care and Support) Act 2006.

Submission to Andrew Nicholls, Acting General Manager, Motor Accidents Authority of NSW

20/3/12

Issues Paper: NSW Fair Trading Regulation of Motor Vehicles. The ICA supports any initiative that increases clarity in regulations governing the trade in motor vehicles, and motor vehicle repair.

Submission to the NSW Fair Trading Review of the Regulation of Motor Vehicles20/7/12

Response to Draft Report: Customers First: Service, Safety, Choice. The ICA registers its support for recommendations that seek to ensure all taxi drivers are fairly covered by third-party property damage insurance, issued by an authorised insurance provider.

Submission to Taxi Industry Inquiry, Department of State Transport, State Government of Victoria

20/7/12

MOTOR VEHICLES

Corporations Amendments (Future of Financial Advice) Bill 2011; Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011. The ICA and its members strongly support the policy goals of the FOFA reforms, and consider the Further FOFA Bill takes a balanced approach to the regulation of advice on general insurance products.

Submission to the Senate Economics Committees, SG.646/2/12

Corporations Amendments (Future of Financial Advice) Bill 2011; Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011. In a supplementary submission the ICA states that consumers enjoy the protection of a strong regulatory regime for general insurance.

Submission to Committee Secretary, Parliamentary Joint Committee on Corporations and Financial Services

14/2/12

FUTURE OF FINANCIAL ADVICE (FOFA)

Funding our Emergency Services. The ICA agrees with the objectives of the Discussion Paper that funding the NSW emergency services requires a measure that is better, fairer and more efficient than the current system.

Submission to News South Wales Government Discussion Paper28/9/12

STATE TAX REFORM

Inquiry into Residential Strata Insurance. Strata insurance premiums have risen significantly from 2009, in particular in cyclone and flood-prone regions of Queensland, Western Australia and the Northern Territory. Governments should resist intervening in the market because the price signal generated by insurance products is a driver for adaptation to risk.

Submission to Committee Secretary, House of Representatives Standing Committee on Social Policy and Legal Affairs

20/1/12

STRATA INSURANCE

Insurance Council of Australia (ICA) submission to the 2012/2013 Commonwealth Budget. The ICA urges the Commonwealth Government to enhance funding under the National Disaster Resilience Program, and notes support for natural disaster mitigation is modest in comparison with post-event funding.

Submission to the Budget Policy Division, Department of the Treasury24/1/12

BUDGET

3736

SUBMISSIONS

Issues Paper: 2012 The General Insurance Code of Practice (The Code). The ICA submission highlights significant changes made to the Code following the catastrophes of 2010-11, including the insertion of a four-month time frame for claims determination, which includes catastrophes.

Submission to General Insurance Code of Practice Review14/12/12

Law Reform (Miscellaneous Provisions) Act 1946: Repeal of Section 6. ICA members are concerned at the prospect of the decision of the New Zealand High Court in the Bridgecorp case being followed by NSW Courts. It could lead to serious consequences for both insureds and insurers.

Submission to Mr David Mitchell, Legislation, Policy and Criminal Law Review Division, Attorney General’s Department

5/3/12

Police Powers and Responsibilities (Motor Vehicle Impoundment) Amendment Bill 2011 − Call for Submissions. The ICA has no issues it wishes to raise in relation to the Bill.

Submission to the Research Director, Legal Affairs, Police, Corrective Services and Emergency Services Committee

30/1/12

OTHER

Consultation Draft: Australian Open Disclosure Framework. The submission notes the ICA’s support for the draft framework.Submission to Professor Debora Picone, AM, CEO, Australian Commission on Safety & Quality in Health Care

31/8/12

Malaysia-Australia Free Trade Agreement (MAFTA). ICA members are concerned international interests are vulnerable to host governments changing the extent of foreign investment allowed in a joint venture. The ICA welcomes the Malaysian commitment under MAFTA to guarantee up to 70 per cent foreign ownership of a direct insurance joint venture.

Submission to Committee Secretary, Joint Standing Committee on Treaties6/9/12

A Transition Plan for Australia’s Travel Agents. Travel insurance products do not provide compensation to consumers for the insolvency of a travel agent. In the absence of a Travel Compensation Fund, consumers will have little opportunity to recover losses, except through action under Australian Consumer Law.

Submission to Mr Rod Stowe, Commissioner, NSW Fair Trading3/9/12

Consultation Paper 183: Giving information, general advice and scaled advice. The ICA acknowledges that guidance provided by ASIC plays an important role in enabling the general insurance industry to ensure compliance with legislative requirements. It states the industry is mostly unwilling to provide personal advice on its products as there is uncertainty in relation to the boundary between personal and general advice.

Submission to Ms Sophie Waller, Senior Lawyer, Strategic Policy, ASIC25/9/12

Request for Comment − Insurers: Rating Methodology. The nature and complexity of credit risk means there will always be a considerable subjective element to credit analysis. The ICA says an overly prescriptive ratings methodology may make it difficult to identify potentially concerning trends.

Submission to Standard and Poors 27/9/12

Strengthening Trans-Tasman Economic Relations. The ICA welcomes the draft on strengthening trans-Tasman economic relations and states it is logical Australian and New Zealand markets benefit from regulatory harmonisation.

Submission to the Australian Productivity Commission18/10/12

Property, Stock and Business Agents Amendment (Professional Indemnity Insurance, Regulation Review, Fair Trading Policy). To avoid confusion the regulation should state clearly that the application of an insurer’s usual exclusions would not affect the acceptability of the policy.

Submission to NSW Government 5/10/12

Discussion Paper: Australian Privacy Breach Notification. The general insurance industry has invested heavily in secure systems and training to foster a culture of best practice in relation to handling privacy breaches.

Submission to Mr Richard Glenn, Assistant Secretary, Information Law and Policy Branch, Attorney-General’s Department

30/11/12

Terrorism Insurance Act. The ICA submits there is an ongoing need to continue the operation of the Terrorism Insurance Act (2003). Access to guaranteed reinsurance for the terrorism risk continues to be necessary in order to deliver commercial terrorism cover.

Submission to Mr Claudio Damiani, Insurance Markets Unit, Treasury13/3/12

PCEHR: Proposals for Rules and Regulations. ICA members are interested in the rules and regulations providing certainty about the obligations and arrangements of healthcare professionals under the PCEHR.

Submission to Personally Controlled Electronic Health Record (PCEHR) Legislation Issues Feedback

12/4/12

Issues Paper: Grey areas − age barriers to work in Commonwealth laws. The ICA has actively participated in discussions on age discrimination and will continue to participate in consultations to identify ways to better publicise the range of policies offered by its members.

Submission to Professor Rosalind F. Croucher, President, Australian Law Reform14/6/12

Personal Injuries Proceedings Act (QLD) 2002 (PIPA): Section 30. The PIPA should be amended to address the current uncertainty for the legal and health care professions.

Submission to Mr Phillip Reed, Director General, Department of Justice and Attorney General, Queensland

15/3/12

Financial Industry Levies 2012-13. The ICA notes inadequate time is being allowed to provide considered comments on the proposals, with the Proposal Paper being released on June 4 for response by June 15.

Submission to Mr Nick Loan, Banking Prudential Policy Unit, Financial System Division, Treasury

13/6/12

Professional Indemnity Insurance Arrangements Registration Standard. The ICA submits members broadly support the registration standard for Professional Indemnity Insurance and considers the majority of requirements are reasonable and fair. However, some requirements are problematic.

Submission to Mr Neil Hicks, Chair, Medical Radiation Practice Board of Australia

23/5/12

Compensation arrangements for consumers of financial services. The ICA is supportive of the report and its recommendations and agrees a last resort scheme for compensation cannot be justified, and further rigour should be introduced to the current regulatory regime to ensure Australian Financial Services Licensees are responsible for holding adequate insurance.

Submission to Ms Irene Sim, General Manager, Retail Investor Division, Treasury9/7/12

Strengthening Economic Relations between Australian and New Zealand. Inconsistency between the solvency standards of the Reserve Bank of New Zealand and Australian Prudential Regulation Authority imposes a significant regulatory burden and cost on Australian insurers that undermines international competitiveness.

Submission to the Productivity Commission4/6/12

NSW Draft Professional Services Industry Action Plan. The ICA and insurers have a strong interest in the development of a NSW plan which will encourage growth in the sector, and supports the draft plan’s identification of export opportunities for the insurance industry in emerging markets.

Submission to Mr Alf Capito, Chair, NSW Professional Services Industry Taskforce30/7/12

NSW Home Building Act 1989 Review. The ICA submits that having a separate definition of completion of work for subsequent purchasers is not practicable. Any sub-contractor engaged by a contractor should be responsible for their work complying with relevant laws.

Submission to Commissioner, Home Building Act Review, Fair Trading Policy17/8/12

Review of the Professional Standards Act 2004. The ICA submits members of its professional indemnity committee advise the Act meets its objectives. Relevant authorities should engage with professional bodies to have schemes in place to encourage their members to embed protection into their day-to-day work.

Submission to the Hon John Rau MP, Deputy Premier and Attorney-General, South Australia

21/8/12

57 public submissions in total

3736

COMMITTEES AND WORKING GROUPS

> ACT Workers Compensation Group

> Anti-Discrimination Working Group

> APRA Working Group

> ASIC Working Group

> Built Environment - Engineering & Construction Working Group

> Built Environment Property Working Group

> Code Compliance Reference Group

> Code Review Working Group

> Communications Committee

> Consumer Credit Insurance Committee

> CRESTA Technical Committee

> Dust Diseases Working Party

> Effective Regulation Working Group

> Finance and Accounting Committee

> Financial Claims Schemes Working Group

> Financial Inclusion Committee

> FOS TOR Working Group

> Government Relations Committee

> Healthcare Indemnity Working Group

> Home Warranty Policy Committee

> Human Resources Working Group

> IAIS Working Group

> Insurance Contracts Act Working Party

> LMI Committee

> Marine Practice Committee

> Motor Accident Insurance Committee

> Motor Policy Committee

> National Consumer Reference Group

> National Disability Support Scheme Working Group

> National Workers Compensation Committee

> NSW CTP Claims Managers Group

> Pandemic Working Group

> Privacy Working Group

> Professional Indemnity Policy Committee

> Public Liability Policy Committee

> QLD CTP Managers Group

> Rural Affairs Working Group

> Sanctions Working Group

> Smash Repair Code Working Group

> Statutory Classes Strategy Committee

> Strategic Communications Group

> Strategic Economic and Taxation Committee

> Strategic Regulatory Policy Committee

> Strategic Risk Committee

> Strategic Underwriting Committee

> Taxation Committee

> Terrorism Working Group

> Tort Reform Committee

> Tow Truck Reference Group

> Travel Insurance Working Group

> VIC Fire Services Levy Working Group

> APRA Catastrophe Data Working Group

> WA Workers Compensation Sub-Committee

> Insurance Fraud Bureau of Australia *

> Catastrophe Coordination Alert Group*

> NFID Users Group*

*distribution group

There are 673 representatives on the ICA’s 56 committees and working groups. The ICA held 183 meetings with these groups in 2012

> Ace Insurance Limited

> Aioi Nissay Dowa Insurance Co. Limited

> Allianz Australia Insurance Limited

> Ansvar Insurance Limited

> AonBenfield Limited

> Assetinsure Pty Limited

> Auto & General Insurance Company Limited

> Avant Insurance Limited

> AVEA Insurance Limited

> Calliden Insurance Limited

> Catholic Church Insurance Limited (Formerly Catholic Church Insurances Limited)

> Chartis Australia Insurance Limited

> Commonwealth Insurance Limited

> Employers’ Mutual Limited

> FM Insurance Company Limited

> General Reinsurance Australia Limited

> Genworth Financial Mortgage Insurance Pty Limited

> Guild Insurance Limited

> Guy Carpenter & Company Pty Limited

> Hallmark General Insurance Company Limited

> Hollard Insurance Company Pty Limited, (The)

> Insurance Australia Group Limited

> Insurance Manufacturers of Australia Pty Limited

> LawCover Insurance Pty Limited

> Lloyd’s Australia Limited

> MDA National Insurance Pty Limited

> Medical Insurance Australia Pty Limited

> MIPS Insurance Pty Limited

> Mitsui Sumitomo Insurance Limited

> Munich Holdings of Australasia Pty Limited

> NIPPONKOA Insurance Company Limited

> NTI Limited

> OnePath Australia Limited

> Progressive Direct Insurance Company

> QBE Insurance (Australia) Limited

> RAA Insurance Limited

> RAC Insurance Proprietary Limited

> RACQ Insurance Limited

> RACT Insurance Pty Limited (Joined in 2012)

> Sompo Japan Insurance Inc

> Southern Cross Travel

> Suncorp Metway Insurance Limited

> Sunderland Marine Mutual Insurance

Company Limited

> Swiss Reinsurance Company Limited

> Territory Insurance Office

> Tokio Marine & Nichido Fire

Insurance Co. Limited

> Virginia Surety Company Inc

> Wesfarmers General Insurance Limited

> Westpac General Insurance Limited

> XL Insurance Global Risk

> Youi Pty Limited

> Zurich Financial Services Australia Limited

ICA MEMBERS AND BRANDS

38

39

Insurance Council of Australia Limited Level 4, 56 Pitt Street, Sydney NSW 2000 t 02 9253 5100 f 02 9253 5111

www.insurancecouncil.com.au @ICAUS