ICA seeks ASIC role on future test cases

The Insurance Council of Australia (ICA) has proposed that the Australian Securities and Investments Commission (ASIC) should be given the power to take the lead on future industry test cases.

In the UK, the Financial Conduct Authority (FCA) launched the test case over business interruption (BI) cover during the pandemic, but similar regulatory powers are not available in Australia.

Locally, the first and second business interruption test cases have been undertaken through protocol agreements between the Australian Financial Complaints Authority (AFCA), participating insurers and ICA.

“We submit that ASIC is better placed to bring a test case in the same way the FCA can, rather than the existing process where AFCA essentially simply consents to a test case,” ICA says in a submission to the Financial Regulator Assessment Authority.

The authority, established after a recommendation from the Hayne royal commission, is currently conducting its first review of ASIC.

AFCA has previously supported consideration of a UK-style test case model for public-interest issues with wide-ranging impacts, while ASIC has also expressed frustration over the current process.

The ICA submission also says it’s time to take stock after the general insurance industry last year navigated some of the most comprehensive regulatory reforms seen in nearly two decades.

“The time is right for all stakeholders, government, and industry alike, to reflect, let the reforms take effect, consider the overall strategic goals for the insurance sector and measures of success, one of which should be a vibrant and innovative market for insurance,” ICA says.

The submission supports a holistic review of the cumulative impact of the recent regulatory reforms.

“We recommend that the Government provide industry sufficient time to embed the reforms, at least three years, with data gathered over that period to inform a post-implementation review in October 2024,” it says.

“Going forward, we recommend the adoption of longer consultation periods by Government and its agencies, noting that the UK standard is around two months.”

The submission proposes that the Australian Competition and Consumer Commission should become part of the Council of Financial Regulators, given its competition lens and the recent and ongoing examination of insurance affordability and accessibility issues.

Click here to read the full submission.