All stakeholders in the Life Insurance industry sit in costly, destructive limbo because common- sense, consumer-focused resistance to faultily designed ‘reforms’ has stalled the passage of the LIF (Life Insurance Framework) legislation through Parliament.
The LICG (Life Insurance Customer Group) ask – why are we trying to rush legislation driven by big banks and insurance companies through parliament, when industry experts have identified the ‘reforms’ bring huge consumer and economic risks?
The FSC gave us the answer in their Trowbridge submission: legislation can by-pass ACCC scrutiny.
The Australian Competition and Consumer Commission (ACCC) defends our free market economy, protecting consumers and businesses from anti-competitive behaviour, especially when consumers are disadvantaged. One of the behaviours they look for is cartel behaviour – a group of industry players colluding to manipulate the market for their own benefit.
Cartel behaviour, price fixing is an example, is against the law in Australia; unless a greater public interest can be proven.
If everyone agrees, and the claims for benefits can be substantiated, the ACCC can approve what would otherwise be deemed price fixing. Like restricting a competitive market by having all insurers reduce their otherwise varied pay rates to the same rate, at the same time on the same day. And all insurers implementing a common claw-back arrangement on the same day at the same time.
If the FSC believes their own rhetoric about ‘churn’ and ‘significant consumer benefits’, and has sufficient evidence to substantiate their claims, why not go to the ACCC?
Had industry gone to the ACCC with a proposition that could provide a better outcome for consumers, despite the negative impact on some industry stakeholders, such reforms could have been implemented a year ago.
The LICG argue that the FSC opted to hastily force the LIF ‘reforms’ through with messy legislation because, perhaps, they did not believe they could satisfy ACCC scrutiny.
The FSC has no data on which to justify their position, no rationale behind reducing remuneration to their recommended level, and no one has been able to specify one single benefit to consumers. There is no evidence of ‘churn’. No-one has even defined ‘churn’.
That would make it difficult to justify to the ACCC.
Consumers deserve to be able to trust that our Financial Services sector representatives are acting for them and not just for the shareholders of the huge organisations that make up the FSC.
Insurers paid out almost $7billion in claims last year (see note 1). We need more great advisers to help more Australians get reliable and appropriate cover. These ‘reforms’ do not address that, they threaten it.
We can fix this tomorrow and help save Australia’s future from the major and identified risk of consumer underinsurance if all stakeholders agree to use real data, considered, long term policy, and come to the table with respect, honesty and integrity.
We ask the FSC – are you willing to come to the table with a range of representatives, on those terms, to get some certainty for all stakeholders in this great, and once united, industry?
Notes:
1. Thank you to the Risk Store for their initiative and commitment in providing claim data each year.
