Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report entitled Advisory report on the Insurance Contracts Amendment Bill 2011, incorporating supplementary remarks, together with the minutes of proceedings.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—The floods of 2010-11 were a devastating blow to many communities with lives lost and homes and property destroyed. In the aftermath, the tragedy and devastation was made worse when many people found that they were underinsured or that their insurance policies did not provide cover.

In many cases, people thought they were insured only to be advised that their policies did not provide for the types of floods that occurred. The discovery that homes were not adequately insured against the floods was devastating for families.

The Insurance Contracts Amendment Bill 2011 is part of a suite of measures to address issues associated with flooding. The bill is a technical piece of legislation which introduces, through schedule 1, a standard definition of flood and, through schedule 2, a key facts sheet. Both the standard definition of flood and the key fact sheet are widely supported by both industry and consumer groups. It is clear that consumer groups have wanted these measures and industry groups support them.

The National Insurance Brokers Association (NIBA), RACQ Insurance, the Insurance Council of Australia, and the Consumer Action Law Centre all indicated that they support both measures.

The bill provides the framework for the introduction of the standard definition and the key fact sheet. Once the bill is passed the regulations prescribing the standards definition and the key fact sheet will be introduced.

The Treasury has issued draft regulations on the standard definition and will soon issue a discussion paper on the key fact sheet. The committee's roundtable public hearing provided a constructive forum to gauge the adequacy of the Treasury's performance in consulting on the standard definition and the key fact sheet.

The committee is reassured by the constructive dialogue between the Treasury, industry groups and consumer groups, and believes that the technical points raised during the hearing can be successfully dealt with as the regulations are further developed.

The committee concludes that the Insurance Contracts Amendment Bill 2011 is an important piece of legislation that should be passed.

I commend the report to the House.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

by leave—As the Deputy Chairman of the House of Representatives Standing Committee on Economics, I am certainly pleased to rise to speak to the committee's report on the Insurance Contracts Amendment Bill 2011. Like Labor members of the committee, Liberal members of the committee were also distressed by the widespread damage and devastation that arose as a consequence of the floods in 2011 in Queensland, Victoria and other places. Liberal members of the committee were of the view going into this that we wanted to see action as well. In that respect we welcomed what had been put forward by the government.

It is clear that, although there is bipartisan support for the need for a standard definition of flood and for a key fact sheet, and for all that to be also endorsed and supported by industry and consumers, the fact remains that there is a very large process problem with how the Insurance Contracts Amendment Bill has gone about it. The reality is that, although Liberal members of the economics committee have reached the same recommendation as the Labor majority on the committee, we are not reassured in respect of the process that has been undertaken, particularly the level of consultation. Our concern goes directly to the fact that the devil is in the detail with the regard to the common definition and the key fact sheet, and the detail in this particular bill lies in the regulations. Industry and consumer groups made very poignant comments at the roundtable that indicated that, when it even came to the impact on, for example, the pricing of insurance contracts, they were unable to determine what the impact would be in the absence of actually having definitive regulations.

It seems a great shame to Liberal members of the committee that, after having gone through this entire process, having garnered to some extent bipartisan support and having garnered to some extent industry and consumer support, the government was unable to provide any clarity around these issues and instead chose to put the hard work in the regulations and simply put in what is commonly referred to as a coathanger piece of legislation. For this reason, Liberal members noted on the evidence that there was, in fact, a view that there could be premium increases as a result of the changes that were being put forward.

There was no clarity about the impact that the common definition would have on, for example, seawater inundation of properties. As well, there was no clarity on what the key fact sheet would mean with respect to the issuing of cover notes and a variety of other things very technical and mechanical in nature nonetheless crucial to the successful operation—both for consumers and industry participants—of the issuing of insurance contracts not only in relation to flood but more broadly.

For these reasons, Liberal members wrote supplementary comments to the report which are contained in the tabled document. In those we highlight our concern over the process. We believe, frankly, that the government should have done a better job in putting this legislation together as a more complete package.