Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Hansard source

in reply—At the outset I thank the member for Moncrieff for his contribution to this debate on the General Insurance Supervisory Levy Imposition Amendment Bill 2006not just for his speech a few moments ago but also for his chairing of the backbench committee, which has been a significant part in the government providing for good outcomes in the insurance area. He has had a direct impact in helping local community groups not just in his electorate but around the country.

The government is committed to making sure that public liability and professional indemnity insurance remains available and affordable in this country. In 2002 a very real crisis was facing the community, the insurance industry and the government. Both public liability and professional indemnity insurance were getting harder to find and more expensive to purchase. This was having a significant and detrimental effect on the community. Many professionals such as doctors, architects and engineers were reporting dramatic increases in professional indemnity premiums. As a result, many were considering leaving their professions.

When the government looked at what was happening it found that on average premiums for professional indemnity insurance had increased by more than 65 per cent in the two years prior to 2002. The situation was, in this government’s view, untenable. The government also saw other significant issues facing the community. In particular, community activities such as fetes, social clubs and sporting events were under threat and faced cancellation. In many cases this was due to insurance simply not being available or, if it was available, premiums had increased beyond the financial resources of the organisation. Many of these organisations unfortunately were not-for-profit community groups.

The government responded to these concerns in the first instance by convening a series of ministerial meetings, commencing in March 2002. These meetings resulted in a nationally coordinated approach to improve the affordability and availability of insurance. Since that time each jurisdiction has undertaken a range of tort law reforms, which has seen public liability and professional indemnity premiums reduce.

From the outset, however, it was recognised that the lack of reliable and public information about these forms of insurance was a problem not just for the industry but clearly for the government as well. It also meant that consumers were in the dark about average premiums and the availability of such insurance. Therefore, the government asked the Australian Prudential Regulation Authority, APRA, as the industry regulator, to build a detailed map of the nature, pricing and coverage of public liability and professional indemnity insurance. APRA, in close consultation with the insurance industry, has developed the national claims and policies database, which will capture a range of information to help with the pricing of public liability and professional indemnity insurance. The database is designed to assist the insurance industry to better assess risk, to determine appropriate premiums and reserves, and to facilitate greater transparency in commercial decision-making by insurers. APRA is currently collecting a range of information directly from insurers. Over time the database will provide the most comprehensive and reliable information about public liability and professional indemnity insurance in this country.

The Insurance Council of Australia, which represents over 90 per cent of insurers, has supported the development of the database. It should be commended for doing so. I appreciate its support for this very important development. In keeping with existing cost-recovery principles, this bill serves to ensure that APRA recovers from industry the costs associated with the database. It is worth noting that it will only collect the levy from those insurers who contribute to it and thereby can benefit from it. This bill ensures a continuation of the database for the benefit of not just those insurers who provide public liability and professional indemnity insurance but, importantly, consumers and the community more broadly. On that basis I commend the bill to the Main Committee.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.

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