The Treasury has started a consultation exercise on standardizing natural hazard definitions and reviewing standard cover for insurance contracts, says assistant treasurer and minister for financial services Stephen Jones.
In a statement, he says that the “government is working to improve insurance affordability as more severe weather events contribute to higher costs. As these events intensify and become more frequent, it’s also important consumers know exactly what they are covered for.”
The Treasury has released a consultation paper and seeks feedback on natural hazard terms that should be standardized and potential reform options for the standard cover regime.
Currently, the only standardized natural hazard definition is flood. This was legislated in 2012. The Treasury will now consider standardizing definitions for three other natural hazards: fire, storm, and stormwater and rainwater runoff.
Insurers’ response
The Insurance Council of Australia (ICA) says that it welcomes the government’s initiative as it aligns with ongoing efforts by insurers to improve customer outcomes by improving transparency and consumer understanding of insurance.
Standardized definitions would mean that all insurers use the same definition for a particular event in their insurance policies.
ICA CEO Andrew Hal said, “We acknowledge there is more to be done to improve consumer understanding of policies, and standardized definitions for fire, storm and stormwater and rainwater runoff may assist with this.”
Separately, the ICA has commenced discussions with insurers about the possible adoption of standardizeds definitions for maintenance and wear and tear exclusions in policies.
Any adoption of standardized maintenance and wear and tear exclusion definitions by insurers through this process would be subject to obtaining required regulatory approvals.
Source: asiainsurancereview.com