Liability Insurance :: News
SHARE

Share this news item!

Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'

Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'

Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'?w=400
Consumer advocacy groups have voiced strong opposition to the insurance industry's decision to reject recommendations designed to eliminate practices that disadvantage consumers, including charging higher rates for monthly bill payments and increasing renewal premiums for loyal customers.
The Financial Rights Legal Centre has cited ongoing reports from consumers being adversely affected by these pricing practices, which they refer to as a "poverty premium" and a "loyalty tax."

The Insurance Council of Australia (ICA) recently published an action plan in response to 150 recommendations from the parliamentary floods inquiry and a comprehensive review of the industry code of practice. Despite the consensus among both reviews that insurers should not charge more for monthly payments than they do for annual ones, and renewal premiums should not surpass those offered to new customers, the ICA asserts that enforcing pricing policies is not within the code's remit due to competition law restrictions.

Continuous concerns have been raised about the code's enforceability and the numerous recommendations the ICA did not fully endorse. Financial Rights Legal Centre's Drew MacRae stated that around 38 recommendations are still under consideration, or have been delegated to individual companies to decide upon.

Financial Counselling Australia has expressed significant concern that the ICA's action plan does not actively address inequitable pricing practices. According to their disaster recovery co-ordinator, Louise Hayes, it is essential for insurers to address these unfair practices and incorporate them into the industry code to ensure accountability and equity.

While the ICA's action plan includes some positive initiatives, such as a framework for assisting vulnerable customers, it also drew criticism for lacking a firm commitment to enforceability. The recommendations from the inquiry suggested these policies should be embedded contractually within product disclosure statements to strengthen consumer protection.

Stephanie Tonkin, CEO of Consumer Action Law Centre, highlights the importance of rebuilding consumer trust, especially following the response to the 2022 floods. She stresses that the industry's focus should shift more towards customer welfare rather than profitability, with enforceable actions driving this change.

ICA CEO Andrew Hall noted that the action plan aims to guide industry changes over the coming years with a central focus on enhancing the customer experience. He acknowledged the necessity of collaborating with consumer advocates, regulators, and the government to tackle the underlying issues cited in the reviews.

Published:Wednesday, 26th Mar 2025
Source: Paige Estritori

Share this news item:

Insurance News

Allianz and AWP Face Hefty Penalties for Misleading Insurance Claims Allianz and AWP Face Hefty Penalties for Misleading Insurance Claims
01 Apr 2025: Paige Estritori

The Supreme Court of New South Wales has imposed significant criminal penalties on Allianz Australia Insurance Ltd and AWP Australia Pty Ltd. Allianz received a $13.5 million fine, while AWP was fined $3.3 million. These penalties were for falsely or misleadingly promoting financial products online, breaching sections 1041E(1) and 1311(1) of the Corporations Act 2001. - read more
AFCA Rules in Favour of Owners in Lift Vandalism Dispute AFCA Rules in Favour of Owners in Lift Vandalism Dispute
28 Mar 2025: Paige Estritori

In a landmark decision, the Australian Financial Complaints Authority (AFCA) has mandated that Chubb Insurance replace the hoist ropes of two lifts in an apartment block, following damage attributed to vandalism. The owners' corporation successfully argued that the damage to the lifts was part of a previously recognized vandalism incident. - read more
NSW Government Targets Predatory Practice of Claim Farming NSW Government Targets Predatory Practice of Claim Farming
28 Mar 2025: Paige Estritori

The New South Wales Government is taking decisive action against 'claim farming', a predatory practice that exploits vulnerable individuals by pressuring them to file compensation claims. This practice often involves unethical tactics targeting susceptible groups, including child abuse survivors. To combat this, the government is set to introduce the Claim Farming Practices Prohibition Bill 2025. - read more
RAA Partners with Duck Creek for Major Tech Overhaul RAA Partners with Duck Creek for Major Tech Overhaul
27 Mar 2025: Paige Estritori

The Royal Automobile Association (RAA), a leading motoring group in South Australia, is set to revamp its technology infrastructure by adopting Duck Creek's OnDemand cloud platform. This strategic transition will see RAA's outdated systems for motor and home insurance transformed to include streamlined policy, rating, billing, and claims management, as well as enhanced data handling and insights capabilities. - read more


Business Insurance Articles

Liability Risks: What Small Businesses in Australia Should Know Liability Risks: What Small Businesses in Australia Should Know
Welcome to our comprehensive guide on liability risks for small businesses in Australia. The world of business is fraught with challenges, and one often overlooked aspect is the array of potential liabilities that can stifle growth or even lead to catastrophic financial loss. It's crucial for small business owners to grasp the critical role that insurance plays in the protection and longevity of their ventures. - read more
The Cost of Public Liability Coverage: Is It Worth It? The Cost of Public Liability Coverage: Is It Worth It?
Public liability insurance is a crucial safety net for both businesses and individuals, providing protection against the financial fallout from claims of injury or damage that your business operations might cause to third parties. This type of insurance is designed to cover legal and compensation costs, safeguarding you from unexpected financial burdens. - read more
The Essential Guide to Liability Insurance for Freelancers The Essential Guide to Liability Insurance for Freelancers
Liability insurance is a type of coverage designed to protect you from claims arising out of injuries or damages to other people or property. For freelancers, who often juggle multiple projects and clients, liability insurance can offer a safety net that reduces financial risk and instability. - read more
Understanding Product Liability Insurance in Australia: A Business Owner's Guide Understanding Product Liability Insurance in Australia: A Business Owner's Guide
As a business owner in Australia, navigating the complexities of protecting your company is crucial, with product liability insurance being an essential aspect to consider. This type of insurance is designed to shield businesses from financial losses that may arise if a product they manufacture, supply, or sell causes harm to a consumer or damages property. - read more
Understanding Liability Insurance: A Must-Read for Australian Small Business Owners Understanding Liability Insurance: A Must-Read for Australian Small Business Owners
Liability insurance is a form of insurance designed to offer protection against claims resulting from injuries and damage to people or property. It covers legal costs and any payouts for which the insured party would be responsible if found legally liable. Intended to protect against claims resulting from injuries and damage to other people or property, liability insurance is critical for small businesses as it shields them from potentially crippling legal expenses. - read more
How to Choose the Right Public Liability Insurance for Your Business How to Choose the Right Public Liability Insurance for Your Business
Public liability insurance is a key consideration for business owners in Australia. This type of insurance helps protect businesses against claims made by third parties for injuries or property damage. But what exactly does it do? In simple terms, public liability insurance covers legal costs and expenses, as well as any damages awarded, if your business is found liable for an incident. - read more
How to Assess Your Risk Exposure and Select the Right Indemnity Coverage How to Assess Your Risk Exposure and Select the Right Indemnity Coverage
Professional indemnity insurance stands as a pivotal safeguard for Australian professionals navigating the intricacies of liability in their work life. This form of insurance is designed to protect professionals against legal costs and claims for damages arising from acts, omissions, or breaches of professional duty in the course of their practice. Whether it's due to an honest mistake or an unforeseen error, the ramifications of such professional oversights can be financially crippling. - read more
How to Lower Public Liability Insurance Premiums Without Sacrificing Coverage How to Lower Public Liability Insurance Premiums Without Sacrificing Coverage
In the ever-evolving landscape of Australian commerce, business insurance stands as a crucial bulwark, safeguarding enterprises against unforeseen financial perils. Recognizing this, our in-depth exploration begins with an overview of the monumental role business insurance plays for Australian companies, both large and small. It's a cornerstone for risk management, providing business owners with peace of mind as they navigate the intricacies of their industries. - read more


Start Here !
Your free liability insurance quote comparison starts here!
Cover Amount:
Postcode:

All quotes are provided free and without obligation. We respect your privacy.

Knowledgebase
Insurable Interest:
A financial or other kind of interest in the insured item or person, necessary for a valid insurance contract.