NEWS

ACIL Exposes Widespread Misconduct in Strata Insurance Appointments, Calls for Regulatory Investigation

In a significant move aimed at safeguarding consumers, ACIL has recently identified and reported to both Australian Securities and Investments Commission (ASIC) and the Australian Competition & Consumer Commission (ACCC), 146 examples of what we believe constitutes misconduct involving the unlawful appointment of insurance brokers by strata managers for strata insurance policies.

Our investigations suggest a disturbing trend where strata managers have been implicated in financially benefiting from the switching of insurance policies to brokers who then levy exorbitant fees and commissions. This occurs without the informed consent of the insured parties, leading to substantial financial detriment. ACIL's findings indicate that these practices have contributed to consumer financial losses in excess of $240 million.

The gravity of the situation has prompted ACIL to urge ASIC and ACCC to not only scrutinise the 146 reported examples but to also embark on a broader, industry-wide investigation. It is ACIL's stance that such a comprehensive inquiry will uncover widespread instances of unlawful activities perpetrated by strata managers in the arrangement of insurance, underscoring the need for immediate and decisive regulatory action.

To shed further light on these concerning practices and their impact on consumers, ACIL has produced an informative video detailing our findings and the steps we have taken in representing these issues to ASIC and ACCC. We invite all stakeholders and the general public to view this video to gain a deeper understanding of the significant consumer rights issues at play. Click here to view the video https://youtu.be/gd5Pim06aE4.

ACIL is steadfast in its commitment to protecting consumer interests and upholding the principles of transparency, choice, integrity, and accountability within strata insurance practices and the broader insurance industry.

Consumer Groups Demand Explanation from Insurers on Lack of Cover in Northern Australia

Consumer groups Australian Consumers Insurance Lobby Inc (ACIL), Unit Owners Association of Queensland (UOAQ), Owners Corporation Network of Australia (OCN), and NQ Strata Action Group have collectively issued a formal request to the Insurance Council of Australia (ICA) seeking an explanation for the lack of insurance coverage offered in Northern Australia, despite the implementation of the Cyclone Reinsurance Pool (the Pool).

As of December 31, 2023, large insurers were mandated to participate in the Pool, a government initiative aimed at providing affordable insurance options in cyclone-prone areas. Despite this, major Strata Insurers such as Chubb, SUU (CGU), SCI (Allianz), and Longitude (Chubb) have continued to withhold quotes for new policies in the Northern region. This has resulted in a notable shortage of insurance coverage, particularly impacting properties valued over $5 million, and more severely those over $20 million due to limited available insurers.

The consumer groups highlight that certain property categories, including older constructions and buildings with specific architectural features like tile roofs, are still facing significant challenges in obtaining insurance despite being eligible under the Pool. This situation is exacerbating the already acute market shortfall in the strata sector in Northern Australia.

The consumer group alliance has highlighted the essential role of insurers in preventing market failure. They emphasise that it is critical for insurance companies to do all things reasonable to ensure accessible and affordable insurance. The continued reluctance to offer quotes following the implementation of the Pool raises serious concerns about the insurers' commitment to acting in good faith with the Pool and addressing the market challenges faced by consumers.

“In several instances, we've noticed significant premium reductions in some instances 50%, for insurance renewals on large strata buildings insured through the Pool. This indicates that the Cyclone Reinsurance Pool is successfully reducing premiums for such buildings. However, the reluctance of insurers to provide quotes for new policies, despite having access to this pool, remains a point of confusion for consumers. The pool's introduction has changed the landscape of reinsurance limitations and we are eager to understand why insurers are still hesitant to offer insurance in this new environment.” Said Tyrone Shandiman of Australian Consumers Insurance Lobby Inc.

“As a committee member of a body corporate in the Whitsundays, we find ourselves with no other option than to secure insurance from an international provider with premiums that are tenfold higher than those typically seen in South East Queensland. Despite the introduction of the Cyclone Reinsurance Pool, which we hoped would broaden our choices and reduce costs, the anticipated benefits have yet to be realised.” Said Bob Boundy Treasurer of UOAQ.

This situation calls for immediate action and transparency from insurers to fulfill their obligations and provide the necessary coverage for the consumers in Northern Australia.

Driving Positive Change: ACIL Announces Winners of the Inaugural Consumer Choice and Fumble Awards

The Australian Consumers Insurance Lobby is (ACIL) is pleased to announce the winners of its first-ever Consumer Choice and Fumble Awards. These awards, part of our mission to champion change within the insurance industry, recognise both excellence and areas needing improvement.

Consumer Choice Awards - Celebrating Excellence

This year's Consumer Choice Awards honour those who have demonstrated outstanding commitment to consumer-friendly practices in the insurance sector.

ACT Government: Recognized for abolishing stamp duty on insurance premiums, easing the financial burden on consumers.
Margaret Shaw: Awarded for her advocacy in affordability and support for the Cyclone Reinsurance Pool, significantly enhancing insurance accessibility in northern Australia.
QBE & Allianz: Acknowledged for their exemplary dispute resolution performance, evidenced by the lowest number of disputes referred to the Australian Financial Complaints Authority among major insurers.
Sure Insurance: Commended for its support to consumers in Northern Australia, particularly for joining the Cyclone Reinsurance Pool and entering the market amidst industry withdrawals.

The Fumble Award - Highlighting Areas for Improvement

The Fumble Award spotlights industry practices that detrimentally impact consumers, with the aim of encouraging positive change.

This year's Fumble Award winner goes to the Cyclone Reinsurance Pool. Despite its potential, it has fallen short in delivering expected savings to consumers in Northern Australia. ACIL remains optimistic about its future improvements for consumer benefit.

Fumble Award Nominees:

Queensland Government: High insurance costs and significant revenue collection from consumers in cyclone and flood-prone areas, calling for a review of stamp duty policies.
IAG, Chubb, Auto & General and Zurich: Delayed participation in the Cyclone Reinsurance Pool, impacting the pool's effectiveness and understanding of its benefits for Northern Australia.
Campsie Shire Council: Approving risky construction in flood-prone areas, raising concerns about consumer safety and market stability.
Strata Management Industry: Questionable practices regarding insurance commissions, lacking transparency and potentially affecting consumer welfare.

ACIL continues its unwavering commitment to advocating for consumer rights and driving meaningful transformation in the insurance sector. We congratulate this year's winners for setting benchmarks of excellence and encourage all industry players to view these awards as a call to action towards a more consumer-friendly insurance landscape.

The full announcement can be found in the PDF below: