ACIL Chairperson Discusses Concerning Strata Insurance Remuneration Practices in ABC Investigation

ACIL pleased to share an important investigation published by the ABC today, which exposes significant conflicts of interest within the strata insurance industry. The Story highlights the concerning findings of a recent ABC investigation into NetStrata, one of Australia’s most prominent strata management firms. The story reveals that NetStrata has quietly uploaded years of past insurance invoices to its clients’ online portals, exposing brokerage fees that far exceed industry norms.

The full story by ABC can be read here, and we encourage all stakeholders to stay informed about these developments as we continue to push for reforms that enhance accountability and transparency.

ACIL remains committed to advocating for the rights of strata owners and pushing for systemic change in the insurance and strata management sectors.

Stay tuned for more updates on this issue as we continue to work towards a fairer future for all property owners.

Disappointment from ACIL Over Cyclone Pool Rates: Calls for Major Overhaul

The Australian Consumers Insurance Lobby (ACIL) has expressed its disappointment following the Australian Reinsurance Pool Corporation’s (ARPC) announcement (click here) of the premium rates for the Cyclone Reinsurance Pool, set to take effect from April 1, 2025. ACIL argues that, despite the announcement, no significant changes have been made to address the ongoing discrepancies in insurance costs for Northern Australia.

“There remain unacceptably high gaps between home insurance and strata premiums north of the Tropic of Capricorn and the rest of the country. This disparity unfairly burdens Northern Australian residents,” said ACIL Chairperson, Mr. Tyrone Shandiman.

While ACIL acknowledges that ARPC is bound by the Treasury Department’s structure for the pool, ACIL are urging a comprehensive review, noting structural deficiencies in the current arrangement.

"One of the biggest anomalies, which disappointingly remains unaddressed in the recent rate review, is the fact that policy holders south of coastal Port Macquarie, including Sydney, contribute nothing towards the Cyclone Pool, leaving Northern Australians to subsidise these areas. This is despite historical data showing that cyclones have impacted Sydney in the past," Mr. Shandiman added.

Research shows that cyclones impacted New South Wales, including Sydney approximately every two years between the 1940s and early 1970s, with a total of sixteen cyclones recorded in New South Wales during that period. These cyclones were linked to the Interdecadal Pacific Oscillation (IPO), not global warming, and recent research indicates that similar IPO conditions have returned.

In addition, warmer water temperatures measured off Sydney in autumn 2024, driven south by the East Australian Current, suggest the layered potential for future cyclones along the New South Wales coast. “Despite these risks, Sydney and areas south of Port Macquarie are effectively exempt from contributing to the pool, creating an inequitable distribution of risk and financial burden,” Mr. Shandiman said.

ACIL believes that the Cyclone Reinsurance Pool is essential for addressing affordability and availability of insurance, particularly in high-risk areas. However, without structural changes in the 2025 review, the pool will fail to meet its objectives of adequately reducing insurance premiums for Northern Australia.

“The pool needs to ensure that high-risk areas are not forced to subsidise free cover for areas with a history of cyclone activity or emerging risks,” Mr. Shandiman said. “We are calling on the government to reconsider the current structure and to adopt a more equitable spread of risk, so that all Australians share the burden fairly.”

“The government must ask itself if the status quo is acceptable. ACIL believes it is not,” Mr. Shandiman concluded. “The upcoming 2025 triennial review is an opportunity to bring fairness to the Cyclone Pool.”

ACIL Expresses Concerns Over Gaps in Insurance Code Review on Expert Reports

The Australian Consumers Insurance Lobby Inc. (ACIL) has formally expressed concerns to the Insurance Council of Australia (ICA) regarding the recently released General Insurance Code of Practice Independent Review Initial Report, as well as the Use of Expert Reports Industry Best Practice Standard.

ACIL, representing the interests of insurance consumers, has identified critical gaps in the current proposals that fail to address significant issues associated with expert reports in insurance claims processes. ACIL Chairperson, Tyrone Shandiman, raised these concerns in a recent meeting and a series of letters to ICA, emphasising the need for more comprehensive standards and accountability measures for experts involved in insurance claims.

What’s Missing?

While the Use of Expert Reports Industry Best Practice Standard governs how insurers use expert reports, ACIL is alarmed that no clear standards are imposed on the experts themselves regarding the production of their reports or the evidence they provide. Consumer advocates have reported to ACIL that insurers do not appear to have taken any steps to implement the new standards and when concerns have been raised insurers are not seeking to comply with the new standards.

ACIL believes the current proposals lack the following essential conditions for service suppliers (experts):

• Evidence-Based Reporting: Experts must provide sufficient evidence to substantiate their conclusions, ensuring opinions are well-supported and verifiable.

• Accurate Citation of Regulations: Expert reports should correctly cite and apply relevant building codes, standards, and regulations in each case.

• Consideration of Certified Solutions: Experts should evaluate whether performance solutions have been previously certified when reporting on defects.

• Comprehensive Investigations: Experts must conduct thorough investigations relevant to the issues at hand, including the identification and undertaking of additional investigations where required, especially in complex cases.

• Inconclusive Findings: Where findings are not definitive, experts should explicitly state this in their reports, rather than defaulting to interpretations that may favour insurers, such as solely identifying excluded causes for damage.

In addition to concerns about expert standards, ACIL also raised issues regarding insurers' practices that may unduly influence expert opinions and their impartiality, along with vendor contracts that incentivise denying or reducing claims. Furthermore, the current process for disputing expert opinions often places a financial burden on consumers, who are required to pay for an alternative expert to challenge the findings. ACIL believes this creates a power imbalance, as many consumers are either unable or unwilling to take on the risk of incurring substantial costs to dispute an expert’s report.  ACIL believes when disputes arise, insurers should be required to use other independent providers and give consumers the choice of who should be engaged on their claim.

Call for Action

ACIL is urging the ICA to incorporate these critical issues into the new Code of Practice to ensure that consumers are not unfairly disadvantaged by the current gaps in the oversight of expert reports. "The lack of sufficient regulation around expert reporting standards creates a power imbalance that harms consumers, who often bear the financial burden of challenging expert opinions," said ACIL Chair Tyrone Shandiman. " Will insurers and their experts address this, or will they face their own “Four Corners Moment”? ASIC has signaled its intention to further scrutinise claims management practices in the industry, so it’s in insurers' best interest to act proactively.' ACIL is committed to working with the ICA to ensure these concerns are addressed and will continue advocating for stronger consumer protections."