7 March 2018

Rob Whelan, Opening Remarks for the Annual Forum 2018

Opening Remarks - 2018 Annual Forum - Hilton Sydney - March 7, 2018

Mr Rob Whelan

CEO, Insurance Council of Australia

Good Morning and welcome to the Insurance Council’s annual industry Forum

Once again we have a rich and diverse program for you and I’m very pleased Ellen can be here to help steer us through today’s busy agenda

Before we dive into the program, on behalf of the Insurance Council of Australia, this Forum and all speakers and delegates, I acknowledge the traditional custodians of the land on which we meet – the Gadigal people of the Eora Nation

I pay respect to Eora elders past and present, and extend that respect to other Aboriginal and Torres Strait people here today

THREE AREAS OF FOCUS

Before we hear from our Minister, the honourable Kelly O’Dwyer, I’d like to take just a few moments to share with you some perspectives on the industry I think are pertinent to today’s content

My remarks focus on the state of play in three key areas:

The regulatory scrutiny on the general insurance industry over recent years

The way insurers have responded to improve consumer outcomes

And a note of caution on the prospect of reform fatigue

CYCLONE DEBBIE

It’s salient to recall that just under a year ago, Cyclone Debbie struck North Queensland

Debbie was a large and unusual cyclone that rampaged through North Queensland, impacting an area larger than Great Britain

It caused widespread wind and particularly massive flood damage to thousands of homes and businesses in three states before heading over to New Zealand, where it wreaked further havoc, causing one of the worst storms there in living memory

The latest figures show insurance losses total 1.67 billion dollars from some 75,000 claims

The effective response from the industry has resulted in more than 95 per cent of 37,100 residential building claims and 23,000 contents claims being finalised at this 12-month anniversary

This is a truly outstanding result to a catastrophe which by any measure was one of the country’s worst

Perhaps more important than the claims statistics themselves is the demonstration of how effective the industry has become in mobilising massive resources to deal with tens of thousands of claims, often in highly remote areas

I mention this not only because it is a great achievement but also because this is what the industry does day in and day out regardless of what other challenges it must deal with

And the community would expect no less

That’s not to say that issues haven’t occurred

And while there are always lessons to be learnt and improvements to be made, the industry has demonstrated a willingness to resolve issues and make necessary changes

An important part of that process is being there and listening to customers long after the media spotlight has moved on

The ICA, with its member companies, has organised more than 200 community gatherings, forums and one-on-one meetings to help locals through their issues and forge a better relationship between the industry and customers

And we’ll be up in the Whitsundays again next week to check on progress and talk to policyholders, and their community leaders and political representatives

Nevertheless the industry attracts criticism and scrutiny, which in many respects would be expected when we play such a vital role in the economy and in the life of the community

And so we have today perhaps an unprecedented level of regulatory and governmental oversight on the financial services sector broadly, and on the General Insurance industry in certain aspects of its conduct

REGULATORY SCRUTINY

Without listing all the inquiries and reviews the industry has been subjected to over the past few years – suffice to say we have been kept very busy responding to the demands of these inquiries

And today I would hazard that we have never been busier

We have a Royal Commission under way, plus a three-year ACCC inquiry into northern Australian insurance, a Productivity Commission examination of industry competition, and more

Naturally we will do all we can to provide the necessary information and material to these inquires

But what is important is that we don’t lose sight of our core business and our raison d’etre

Indeed we look to these inquires as opportunities to:

Challenge commonly held misconceptions

Highlight the importance of the industry in a modern economy

And profile what has been achieved by an industry willing to embrace change and improve its performance for the betterment of its customers

In many respects the Royal Commission can be seen as a positive for insurers

It will deal with community concerns in one fell swoop and will facilitate reforms already in the pipeline

It may boost community trust in insurance, and other financial services, through increased transparency

This afternoon a panel of consumer and insurance experts will help unpack the Royal Commission, with a particular focus on community expectations

It should be a lively session

IMPROVING CONSUMER OUTCOMES

From the General Insurance perspective I’m pleased to say the industry has been working diligently to address areas of community concern

In these endeavours the industry has partnered with government, regulators and consumer representatives to identify issues and concerns and to devise ways they can be addressed

Of particular note is the work being done on finalising an extensive review of the Industry Code of Practice

And in implementing the findings of the Disclosure Taskforce, which will help improve consumers’ understanding of the products they buy and guarantee a level of service

Another example of partnerships to improve consumer outcomes is a joint public and private sector initiative with Comcare

This afternoon, Comcare CEO Jennifer Taylor will launch a partnership that holds the prospect of benefiting thousands of injured and disabled Australians by coordinating the various sectors that provide care and getting the injured back into a productive work life

I’m also proud the industry is embracing complex issues, including how insurers can help those suffering the impact of family violence, mental health concerns and other sensitive claims

REFORM FATIGUE

However, I have some concerns regarding the sheer volume and complexity of the reform agenda

The combined impact of years of government and regulatory focus on this industry is taking its toll

Early in the life of the Turnbull Government, key ministers talked about reducing unnecessary regulation, and the need to balance new regulations with the removal of others

Instead, more imposition seems likely, particularly through Unfair Contract Terms and Product Design and Intervention powers

And of course whatever recommendations may result from the Royal Commission

Reform fatigue is alive and well

At some point we need to pause – to take stock of the cumulative impact of regulatory change, the capacity for the industry to implement the changes and the commensurate increase in costs that may be passed on to consumers

That being said we must also not give up on changes that would genuinely and transparently benefit the Australian public

I strongly support Ken Henry’s comments last week, in which he lamented the failure of governments to reform unfair and inequitable tax burdens

Most notably state stamp duties on insurance premiums, which add 9 to 11 per cent to the price of insurance

And so to today’s Forum, which promises to be not only informative but also challenging to some points of view

We will hear from our Minister Kelly O’Dwyer and from the Shadow Assistant Treasurer Dr Andrew Leigh, and I thank them for their participation

We will also hear from our regulators – Geoff Summerhayes from APRA and Peter Kell from ASIC

Their perspectives on the state of the industry will no doubt give us a better understanding of the direction for future regulation

I’m also looking forward to hearing again from George Megalogenis, one of Australia’s most admired journalists and commentators, as he explores the way changes in Australian society are shaping our politics, economics, business and media

For those who want the big picture we will soon hear from Dr Stefan Hajkowitz, a CSIRO scientist who will be exploring five global digital megatrends and what they mean for us      

Today is an opportunity to challenge your thinking, to seek the opportunities in the issues that confront us, and to be proud of your contribution to the communities in which we live

Once again I welcome you all to the Forum

 

 

 

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