Lobby might be ‘open’ to a commissions cap

In a submission to the Australian Competition and Consumer Commission (ACCC) published recently, the Insurance Council of Australia (ICA) defended commissions on the ground that general insurance contracts were simple, short term and therefore “not like other financial products”.

But the ICA said it might support reforms ‘that would ensure commissions are not excessive’.

The ACCC recommended the change in the interim report of its three-year Northern Australian Insurance Inquiry, published in December 2018. The report found consumers in natural catastrophe-prone regions had seen premiums rise 130 percent in real terms during the past 10 years, compared with 50 percent in the rest of the country.

Among the ACCC’s findings was that broker remuneration structures “inevitably give rise to conflicts of interest, which consumers may not be fully aware of”, according to a report in the Australian Financial Review.