Self-Regulation is Failing – Time for Government to Take Over the Insurance Code

The Australian Consumers Insurance Lobby (ACIL) has slammed the Insurance Council of Australia’s (ICA) response to the General Insurance Code of Practice review, stating that self-regulation in the insurance industry is failing consumers. With insurers cherry-picking recommendations and refusing to adopt key reforms from its own independent reviews and government inquiries, ACIL believes the government must now consider taking control of the Code.

Click Here to View Copy of the Report:

ACIL Code of Practice (Self Regulation is Failing) Final.pdf

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“The blatant disregard for independent review recommendations and findings from government inquiries is yet another example of the industry behaving poorly,” said Tyrone Shandiman, Chair of ACIL. “The insurance industry should not be dictated to by insurers—it must work for consumers.”

ACIL has highlighted three critical areas where the industry response is inadequate and harmful to policyholders:

• Expert Reports – Insurers continue to rely on biased expert reports to deny claims, yet there is no clear timeline for finalising the Use of Expert Reports: Industry Best Practice Standard. Without enforceable rules, insurers will continue using conflicted experts to support claim denials.

• Cash Settlements – Insurers have sidestepped recommendations to ensure fairer cash settlements, leaving consumers at risk of underpaid claims that fail to cover the true cost of repairs.

• Vulnerability Protections – While insurers claim to support a Vulnerability Framework, there is no clear timeline for completion or commitment to enforceable obligations. This leaves vulnerable consumers at risk of inadequate support when they need it most.

In addition to these critical issues, insurers continue pricing practices that are detrimental to consumers (C-89 & C-88), including charging more for instalment payments and offering higher renewal quotes than those available to new customers.  They have rejected calls to guarantee temporary accommodation until claims are finalised (PFI-10 & C-69), refused to offer fairer premiums during claims delays (PFI-60), and opposed flexibility in rebuilds (PFI-26) despite pushing for $30b of government resilience funding. Insurers also refuse to make the Code contractually enforceable (PFI-47), weakening accountability.

Despite rejecting these critical reforms, insurers now want ASIC to sign off on the Code of Practice, despite failing to implement key recommendations. “How can ASIC endorse a Code where insurers have ignored their own independent recommendations without a rigorous process to justify these decisions?” said Shandiman.

ACIL is urging the Insurance Council of Australia to reconsider its response and commit to meaningful reforms. “If insurers refuse to act in the interests of consumers, we will actively lobby for a government takeover of the Code to ensure policyholders receive the fairness and protection they deserve,” Shandiman said.

Assurances Needed: Will Northern Australians Be Left Paying for Cyclone Claims in the South?

The Australian Consumers Insurance Lobby (ACIL) is calling on the Federal Government to provide assurances that Northern Australian residents and small businesses will not be left subsidising cyclone claims in southern parts of Australia under the Cyclone Reinsurance Pool.

The projected path of Cyclone Alfred—while ultimately causing less damage than expected—highlighted major flaws in the current modelling. There is a real risk that Northern Australians, the very people the pool was designed to assist, could be paying the price for a major cyclone event in Brisbane or even further south.

Interdecadal Pacific Oscillation (IPO) and Shifting Cyclone Risks

A key concern is whether the government has properly accounted for changes in cyclone risk patterns. Scientists believe that the Interdecadal Pacific Oscillation (IPO)—a climate cycle that operates over 15 to 30 years—may have shifted back into a negative phase around 2020–2022.

Historical data shows that the last prolonged negative IPO phase (1947–1976) coincided with increased cyclone activity in Southern Queensland and New South Wales, with at least one cyclone reaching Sydney. However, when the Cyclone Reinsurance Pool premium rates were set in 2022, Australia was not in a confirmed negative IPO phase.

ACIL is concerned that the current modelling may not reflect the increased likelihood of cyclones affecting southern regions, and Northern Australians could be left carrying the financial burden of claims from areas that were not originally factored into the pool’s risk profile.

No Cover Instead of Free Cover

Adding to these concerns, residents south of Port Macquarie do not contribute to the pool, yet they receive free cover. Cyclones have historically impacted areas beyond Port Macquarie, and there is a real risk that a major cyclone event further south would see Northern Australians unfairly footing the bill.

ACIL is calling on the government to urgently review the structure of the pool to ensure that:

• Regions with cyclone risk contribute fairly to the pool, rather than some receiving free cover at the expense of others.

• Alternatively, regions deemed to have a zero chance of cyclone impact should be excluded from the pool entirely, ensuring that only those who are contributing receive protection.

Government Must Provide Assurances on Premium Equity

“The Cyclone Reinsurance Pool was meant to improve affordability for Northern Australians, but there is a growing risk that they could end up paying for cyclones in the south,” said Tyrone Shandiman, Chairperson of ACIL.

“We are seeking urgent assurances from the Assistant Treasurer, Stephen Jones, that Northern Australians will not be left subsidising cyclone claims from other parts of the country. The government must ensure the pool operates fairly, with equitable premium contributions and long-term climate factors properly accounted for.”

ACIL urges the Federal Government to immediately review the pool’s modelling and pricing structures before Northern policyholders find themselves paying for a system that was meant to help them.

McGrathNicol Report on NetStrata Leaves More Questions Than Answers - NSW Fair Trading Must Investigate Further

The Australian Consumers Insurance Lobby (ACIL) has today released its analysis of the McGrathNicol report into NetStrata, raising serious concerns about transparency, decision-making processes, and the impact on consumers. While the report attempts to assess whether NetStrata’s wholly owned brokerage firm, Strata Insurance Services (SIS), charged excessive brokerage fees or insurance premiums, key issues remain unresolved, requiring further investigation by NSW Fair Trading.

Click the below link to access the report:

ACIL Report - Analysis of the McGrathNicol Report on NetStrata.pdf

Download PDF • 373KB

ACIL’s analysis raises issue with potential gaps in the report’s methodology and findings, including concerns over sample selection, unexplained cost reductions, and whether lot owners provided informed consent when engaging SIS. Most notably, the report acknowledges that 8-9% of consumers in the sample were charged brokerage fees of 47% to 69%—yet fails to assess whether this issue is more widespread across NetStrata’s entire portfolio.

"A sample of just 5% of clients may not accurately reflect broader issues. It is unclear whether the selection methodology was statistically sound or if it skewed results toward a more diverse sample that does not represent the full client base. For example, the report highlights excessive fees for buildings with premiums between $827 and $24,169—but was the sample truly proportionate to the number of consumers in this category, or does it underrepresent those most affected? It is simply not acceptable for 8-9% of consumers to be paying excessive brokerage fees between 47% to 69% without further scrutiny. If proper processes under the Strata Schemes Management Act were not followed, and lot owners did not provide informed consent, then this is a serious consumer protection issue." said Tyrone Shandiman, Chair of ACIL.

The report also reveals that insurance costs within the review sample dropped from $1,975,389 in 2023 to $1,197,526 in 2024, yet provides no explanation for this sharp decline. This coincides with ACIL referring 146 cases of overcharging misconduct to ASIC and the ACCC in February 2024, raising questions about whether NetStrata and SIS reduced fees only after facing potential regulatory scrutiny.

Given these concerns, ACIL is calling on NSW Fair Trading to take immediate action by investigating a grater dataset of strata buildings paying less than $25,000 in total insurance costs, as this segment may have a higher proportion of clients subjected to excessive fees.

ACIL understands NSW Fair Trading is currently investigating the issues surrounding NetStrata, and this report forms part of their ongoing review.  "NSW Fair Trading must now step up and prove it is a tough cop on the beat. This report does not provide the full picture, and strata owners deserve transparency, accountability, and consumer protection" Mr. Shandiman said.

ACIL urges NSW Fair Trading to conduct a comprehensive review of NetStrata’s insurance practices, ensuring that all strata owners receive fair treatment and that compliance with the law is upheld.