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.”