Insurance Industry Enquiry Needed to Protect Consumers

FOR IMMEDIATE RELEASE - January 15, 2003
CONTACT: Peter Carter 0422 445 599 or Natasha Maehara 07 3221 1204; 0414 783 502

Consumer bodies today called for a "full and independent" enquiry into dirty tricks prevailing in the insurance industry and the industry's own role in bringing about the Insurance Crisis, in the wake of further scandalous revelations emanating from the HIH royal commission.

Insurance Reform, which aims to "keep insurers honest" and "save consumers' rights" is sponsored by pro-consumer groups including the Civil Justice Foundation and the Australian Consumers' Association. It will challenge insurance companies to implement transparent and fair premium pricing and claims handling.

"Stonewalling policy holders and third parties on legitimate claims is heart breaking to victims but these dirty tricks are considered normal in the industry," said Civil Justice Foundation director Peter Carter. "The practice is not just confined to HIH. Families are stressed to breaking point while insurance executives indulge themselves with multi-million dollar salaries."

Referring to accounts of sham and shadowy deals endorsed by HIH management, Insurance Reform argues, "It would be naive to assume that all other insurance players were lambs at the same time HIH was marauding as a wolf."

"If APRA failed to adequately police HIH and FAI, the presumption is that they also failed in their duty to consumers as regards to the other insurance giants and that they too deserve scrutiny," says Carter.

According to Insurance Reform, "It also now seems clear that the collapse of HIH was a significant factor in the Insurance Crisis that followed and saw public liability premiums double or even triple."

"Despite the devastating effect of the Insurance Crisis on small business and community groups, there has been no enquiry as to its cause or the role of insurance companies in bringing it about," Carter says.

"The enquiry must address HIH's strategy of aggressive premium discounting to win customers at almost any cost, the behaviour of its competitors and how this affected operating profits and ran down reserves ahead of the sky rocketing of premiums that followed," he said.

Insurance Reform also demands the surveillance role of APRA be expanded so that it is empowered to monitor premiums and claims processing.

Reffering to the federal government arranged review by NSW judge David Ipp in September, Insurance Reform says, "So far the only attempt to deal with escalating premiums has been to reduce the exposure of insurance companies in the hope that this will reduce insurance costs."

"But HIH shows that the insurance companies can't be relied on to act in any one's best interest except their own. A full and independent enquiry is needed into those matters Ipp was specifically prevented from examining: the true cause of the crisis, poor underwriting practices as well as and premium pricing and claims handling."

Insurance Reform wants the public to write to or email their state MPs to protest. "Please don't help insurance companies to profit by punishing people who suffer injuries through no fault of their own" urges the form email which, depending on the state of the resident, is addressed either to the state premier or opposition MPs.

Insurance Reform's campaign can be accessed at www.insurancereform.com.au and any person can send a direct letter of protest to their relevant state MP.