To galvanise improvements in consumer understanding, the Insurance Council of Australia (ICA) is proposing an Action Plan of initiatives for both industry and government with some measures which can be implemented now and others which require further cooperative analysis by stakeholders.

The ICA says this in a submission responding to the Treasury’s Discussion Paper “Disclosure in General Insurance: Improving Consumer Understanding”.

The ICA says that it has long had concerns about the effectiveness of the product disclosure regime established by the Financial Services Reform Act 2001 and have consistently advocated for changes which better reflect the characteristics of general insurance.

However, better consumer outcomes cannot be achieved solely through improved disclosure. They also depend on increased consumer understanding of the risks they face and the options available for managing those risks. For this reason, the ICA’s work programme goes beyond disclosure in itself to look at consumer behaviour.

The Action Plan includes the following proposed measures:

For industry

1. Inclusion of year on year premium comparisons in renewal notices for home and contents and motor vehicle policies.
2. Contribute detailed consumer research on value of a core package of covers for home and contents insurance to standard cover regime review.
3. Develop a common definition for “actions of the sea” and work with stakeholders to determine the need for other common definitions.
4. PDSs and KFSs to be published prominently online.
5. Insurance brands to be published on the insurer’s website and on ASIC’s website.

For Government

1. Amend the Corporations Act to make it clear that general insurers can discuss with individual consumers the most appropriate level of sum insured for them.
2. Amend the Insurance Contracts Act to facilitate electronic disclosure of insurance documents.
3. Review the usefulness of the concept of a key facts sheet and consider how it could be made more useful in practice.
4. Legislate to apply protections from unfair contract terms to insurance contracts.

Unless otherwise stated, the initiatives are intended to apply only to policies sold to retail clients.