Insurers calling for less regulation must first demonstrate better behaviour

The Australian Consumers Insurance Lobby (ACIL) has responded to claims by the Insurance Council of Australia (ICA) that regulation is costing consumers up to $3.5 billion annually, saying that the industry’s call for less regulation ignores the underlying causes of why such rules exist in the first place.

The ICA’s report, “The Cost Of Regulatory Burden”, claims regulation represents 4–6% of insurance premiums and involves more than 25 regulators enforcing 300 instruments and 30,000 obligations. While ACIL acknowledges that compliance has costs, it says regulation is not arbitrary — it exists because consumers have repeatedly been let down by the industry.

“If insurers want less regulation, they must behave better,” said Tyrone Shandiman, Chairperson of ACIL.“Government regulation is introduced when there’s evidence of misconduct, poor consumer outcomes, or systemic failure. The way to reduce red tape isn’t by lobbying for less oversight — it’s by demonstrating that you no longer need it.  We’ve heard nothing from the industry on the Code of Practice review for months,” he said. “The first drafts were deeply disappointing — superficial, unambitious, and failed to address the serious issues exposed by the 2022 Flood Inquiry. If the industry can’t get its own house in order, it shouldn’t be arguing for less government oversight.”

ACIL says the insurance industry’s conduct in recent years — particularly around claims handling and delays — shows that stronger oversight remains necessary.

The Australian Financial Complaints Authority (AFCA) reported that nearly one in four general insurance disputes in the September quarter were related to claim handling delays, totalling 8,827 disputes in just three months. AFCA’s Lead Ombudsman for Insurance raised concerns about ongoing claim delays and high complaint volumes, showing that many policyholders are still not receiving timely or fair treatment.

“It’s simply not good enough,” he said. “Two years on from the establishment 2022 Flood Inquiry, we’re still seeing the same problems — delays, poor communication, and consumers left in limbo. Until those issues are fixed, calls for less regulation will fall flat.”

ACIL has written to Assistant Treasurer Dr Daniel Mulino MP, seeking clarification on the status of the 86 recommendations from the 2022 Flood Inquiry.

ACIL says it supports smarter and more efficient regulation but stresses that the first step must be industry-led improvement in behaviour, accountability, and communication.

“Regulation is a consequence of poor conduct,” Mr Shandiman said. “If insurers truly want to ease the compliance burden on consumers, the solution is simple — lift your standards.”

Consumer and Owner Groups: PICA’s Threat Undermines Confidence in Industry Reform

The Australian Consumers Insurance Lobby (ACIL) and the Owners Corporation Network of Australia (OCN) are calling on the New South Wales Government to press ahead with reforms to ban insurance commissions in strata management, following reports that foreign-owned PICA Group has threatened to cancel its membership with the Strata Community Association (SCA) New South Wales (refer article Strata group rebels against SCA reform).

The organisations say the move by PICA — Australia’s largest strata management company — undermines confidence in the industry’s ability to deliver transparency and reform from within.

PICA’s recent media statement includes obvious fear-mongering, suggesting that consumers are not already paying insurers’ costs through their premiums.

“When the largest strata manager in the country threatens to withdraw from its own professional body over transparency measures, it sends the wrong message to consumers, regulators and policymakers,” the groups said in a joint statement. “It highlights why government leadership on this issue is essential.”

ACIL and OCN support SCA’s efforts to raise professional standards and rebuild public trust through reforms focused on transparency, ethical conduct and accountability. While some fine-tuning will be needed to eradicate all conflicted remuneration, the direction is positive for consumers.

“The SCA has shown leadership in moving the industry toward higher standards. Those efforts deserve recognition and support — not resistance from those who benefit from opaque practices,” the statement said.

The groups note there is mounting evidence of malpractice in the handling of strata insurance commissions, and that their organisations are aware of cases being investigated by regulators.

“The practice of fiduciaries taking commissions on essential insurance products has no place in a modern, professional industry,” the statement continued. “It’s a practice that has eroded trust for years and must be brought to an end.”

ACIL and OCN urged the NSW Government and the NSW Strata and Property Services Commissioner to press ahead with banning commissions and ensure reforms that permanently remove conflicts of interest in strata insurance arrangements.

“The SCA needs more members who back transparency and professionalism,” the statement concluded. “If PICA no longer supports that direction, now is the time for other strata managers to step up and fill its shoes — and show consumers that integrity and accountability truly matter.”

AFCA Must Address Power Imbalances in Expert Reports – ACIL Calls on ASIC to Step In

The Australian Consumers Insurance Lobby (ACIL) is calling for stronger protections for consumers in disputes involving expert reports, warning that AFCA’s draft guidance fails to address entrenched power imbalances.

AFCA is currently consulting on its Approach to General Insurance Claims Handling, which sets out how it considers key issues such as expert evidence, cash settlements, delays, and non-financial loss. The consultation is intended to provide clearer guidance for both insurers and consumers on how disputes will be assessed.

Click Here to View ACIL's Submission:

ACIL Submission AFCA Consultation GI Claims Handling Final.pdf

Download PDF • 4.27MB

ACIL Chairperson Tyrone Shandiman said consumers in Dispute Resolution situations are routinely disadvantaged by insurer-appointed experts whose reports are often flawed, biased, or erroneous. “Consumers face an impossible task. Unless they can afford their own expert report—which is often prohibitively expensive—they are left to challenge insurer evidence that AFCA without any professional counter-point is almost too often obliged to accepts at face value. That system needs to undergo fundamental change,” he said

Recent interventions by ASIC have highlighted these systemic problems. In June 2025, ASIC warned insurers to improve their oversight of independent experts, noting that insurers had no systemic approach to checking the quality of reports they rely on when making claims decisions. The General Insurance Code Governance Committee has also documented widespread failings in the use of expert reports.

“Given ASIC & IBCCC’s previous findings, it is clear that insurer misuse of expert evidence is not an isolated issue—it is systemic,” Mr Shandiman said. “That is why we have written to ASIC asking it to provide greater direction to AFCA to ensure fair practices are applied when expert evidence is in dispute.”

ACIL has recommended that AFCA be required to:

• Commission independent expert reports where appropriate, or require insurers to fund them.

• Reimburse consumers’ reasonable costs for obtaining their own expert evidence.

• Require an insurer’s retained expert to disclose conflicts of interest and repeat insurer engagements of experts.

• Treat repeated reliance on flawed reports as systemic misconduct warranting higher compensation and consideration given by AFCA to refer these patterns of behaviour to ASIC

• Maintain a directory of independent experts accessible to consumers.

Mr Shandiman said: “AFCA’s draft guidance on expert reports sets out factors such as independence, qualifications, and plausibility, but in practice AFCA continues to place heavy reliance on expert opinion. A report can satisfy each of these criteria and still be biased or erroneous. This risks turning the framework into a simple checklist for conflicted experts, without addressing the deeper structural imbalance between well-resourced insurers and consumers already under stress after a loss.”

There is a persistent problem with the quality of expert reports in insurance disputes. ACIL believes this stems from the heavy reliance placed on them in the dispute process and the fact that experts are paid by insurers, leaving the system open to abuse. Greater scrutiny of these reports would create stronger accountability and force insurers misusing the process to think twice.