The Parliamentary Joint Committee on Corporations and Financial Services is to report by 30 June 2017 on:
- the need for further reform and improved oversight of the life insurance industry;
- assessment of relative benefits and risks to consumers of the different elements of the life insurance market, being direct insurance, group insurance and ‘retail advised’ insurance;
- whether ‘entities’ are engaging in unethical practices to avoid meeting claims;
- the sales practices of life insurers and brokers, including the use of Approved Product Lists;
- the effectiveness of internal dispute resolution in life insurance;
- the roles of ASIC and APRA in reform and oversight of the industry; and
- any related matters
This is yet another inquiry which may produce yet another report which may add to the long list of unactioned recommendations.
While that is being pessimistic, it remains the case that back in September 2012, the government sought and received many submissions on the need for further reform and improved oversight of the life insurance industry and the powers available to APRA in particular to provide that oversight. There has been no reform.
The submissions were in response to Treasury’s major consultation paper of September 2012 – Strengthening APRA’s crisis management powers – ‘seeking stakeholder views on a range of options directed primarily at strengthening Australia’s framework for financial regulation’.
The paper sets out options for consultation with a view to strengthening APRA’s powers over the entities it regulates, including life insurance companies; simplifying APRA’s regulatory powers across the Life Insurance Act 1995 and the various other Acts it administers; making a series of amendments to that legislation identified as needing reform, and aligning Australia’s regulatory regime with international best practice.
The paper mentions life insurance over 340 times, in the various contexts of policy and need for law reform.
Many thoughtful and well researched submissions were lodged by the due date of December 2012.
No outcome or reforms occurred.
Nearly 12 months ago, in October 2015, the government announced that it would, by mid-2016, “consult (again) on measures to ensure financial regulators have the tools they need to manage any future financial crisis”.
There has been no consultation announced, if one be needed; and this Senate inquiry does not seem to be the consultation the government had in mind.
As with banking, the government’s Insolvency Law Reform Act 2016 did amend the Life Insurance Act 1995, but only in incidental respects, and it gave no attention to the issues raised in the 2012 consultation.
We will follow the Senate inquiry with interest….. It wants submissions by 18 November 2016.