Friday, 7 November 2025
Regulation is costing insurance customers up to $3.5 billion each year and is a having a major impact on productivity, according to a new report released today by the Insurance Council of Australia (ICA).
The Cost of Regulatory Burden report shows that regulation is costing between $2.5 billion and $3.5 billion a year, with more than 30,000 regulatory obligations enforced by 25 different authorities under 300 different regulatory instruments.
Much of this cost relates to reporting and governance obligations, with the major regulatory costs stemming from data reporting, privacy and cyber, claims handling, sales and distribution, and breach reporting.
The report finds that 66 per cent of the regulations governing insurance are prescriptive, dictating how insurers must comply rather than the outcome they must achieve.
This can stifle innovation, disproportionally impact smaller insurers, and lock customers into inflexible process that provide little benefit.
The report identifies the practical steps that regulators could take to make regulation more effective and less costly, including consolidating duplicative provisions, aligning definitions across legislation and regulation, and coordination across regulators and agencies. For example, changes can be made to:
- Overlapping inquiries: Repeated data requests from multiple bodies during crises drain resources, which are focused on re-cutting information instead of helping customers.
- Duplicative reporting: One breach may need separate reports to the Information Commissioner, APRA, and ASIC while conflicting requirements waste time that could be spent aiding customers.
- Cash-settlement factsheet: Mandatory factsheets slow simple payments, with outsized compliance risk for minor errors.
- Anti-hawking provisions: Bans on unsolicited offers hinder helpful conversations, frustrate customers, and add compliance burdens for insurers.
- Breach reporting thresholds: Low thresholds and subjective tests cause over-reporting of immaterial breaches, diverting teams from focussing on real harm.
As part of the Federal Government’s work to boost productivity by reducing regulation, regulators including ASIC and APRA have identified more than 400 initiatives including around 150 new actions that could be taken, which the ICA welcomes.
The Insurance Council and CEOs of a number of insurers and reinsurers last week attended a roundtable hosted by APRA focused on the regulatory burden.
The next phase of this important work will involve a deeper dive into particularly burdensome regulations.
The report is available on the Insurance Council’s website.
Quotes attributable to ICA CEO Andrew Hall:
Australian insurance customers and our financial system benefit greatly from mature regulatory arrangements that are well-balanced.
However, it’s important that we ensure that the cost of regulation – which is ultimately borne by consumers – is proportionate to the problems we’re attempting to solve.
This report puts a cost on insurance regulation for the first time, finding that it is four to six per cent of the $70 billion in premium that is written each year – or between $2.5 billion to $3.5 billion.
Much regulatory cost is reasonable – a strong regulatory framework protects consumers and keeps the sector stable – but the combined impact of 30,000 regulatory obligations is duplication, increased costs, and delays for insurance customers.
A well-designed regulatory framework can reduce these detrimental regulatory impacts, leading to lower costs and faster resolution of claims for customers and supporting innovation and competition in the industry.
