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

I move:

That this bill be now read a second time.

The government recognises the importance of ensuring that consumers are able to access affordable insurance. Insurance helps individuals, businesses and other organisations deal with a range of unexpected events in their lives, by reducing the disruption that occurs.

The government is committed to ensuring that the framework for the prudential regulation of insurers is robust and effective.

Insurers operating in Australia are regulated by the Australian Prudential Regulation Authority, APRA. APRA works with all regulated insurers to make certain that they operate within prescribed standards.

These standards typically involve determining whether the financial framework of insurers is sufficiently robust so that they are able to meet their obligations in a sustainable manner.

This framework benefits not only the insurers themselves but all stakeholders that interact with the insurance sector. Consumers, for instance, have greater confidence in the ability of an insurer to make good on claims made.

The costs incurred by APRA for managing the regulatory framework are recovered from the industry through a supervisory levy.

APRA also incurs costs associated with tasks not directly related to its supervisory responsibilities. For example, it incurs costs in operating the national claims and policies database.

The national claims and policies database was commissioned by the government in the context of concerns in relation to the availability and affordability of public liability and professional indemnity insurance.

Since 2002, the government has led a range of tort law reforms designed to improve the availability and affordability of insurance. These reforms have been designed to ensure that the lack of affordable insurance does not prevent the community from engaging in normal activities such as hosting a local fete or going to the beach. At the same time, reforms have also been designed to ensure that people who provide a service or advice, such as architects and doctors, are not prevented from practising due to prohibitive insurance costs.

To ensure that the benefits of these reforms are passed on to the community, the government asked the Australian Competition and Consumer Commission (ACCC) and APRA to examine and report on the market for public liability and professional indemnity insurance.

As a result of this work, members of the community can now access information about the market for these types of insurance. Initial reports reveal good news about the market, with premiums clearly falling.

Specifically, APRA has developed a database designed to capture public liability and professional indemnity information directly from insurers. Information within the database is used to report on the market and to assist insurers, government and other stakeholders in analysing this market. The expectation is that this information will continue to improve the availability and affordability of public liability and professional indemnity insurance.

However, not all general insurers offer public liability and professional indemnity insurance. In line with the government’s cost recovery principles, only those insurers who contribute to, and thereby can benefit from, the database should contribute towards its cost. Insurers who do not use the database should not be expected to fund it through the general supervisory levy.

The bill provides for a special levy which will allow the recovery of costs from a class of general insurance company. Therefore, the bill will allow the recovery of costs from insurers who are contributing to the national claims and policies database.

The government considers it important that APRA has a sustainable funding base from which to operate. This bill helps ensure the viability of that funding base by providing the flexibility to recover costs where appropriate.

I commend the bill to the House and I present the explanatory memorandum.

Debate (on motion by Mr Bevis) adjourned.