ICA warns on broker impacts from data sharing reforms

9 March 2023

The Insurance Council of Australia (ICA) has warned of potential impacts for brokers from reforms that would give a greater role for intermediaries under new consumer data sharing reforms.

The Consumer Data Right (CDR) has already started in banking, with insurance flagged for future introduction after further consultation, but its use has been relatively limited.

A Federal Parliament committee is reviewing a bill that would add third-party “Action Initiation”, allowing consumers to allow others to access data on their behalf and potentially expand the sharing of information in the sectors designated by the Minister.

The ICA says in a submission to the Economics Legislation Committee that brokers often hold relevant consumer data and CDR application and the provisions contained in the bill is expected to require brokers to become Accredited Action Initiators.

ICA says it understands the cost of accreditation under the existing Act can be substantial for Accredited Data Holders.

“This may be particularly acute for brokers that become Accredited Data Holders and/or

Accredited Action Initiators, as they are often small businesses,” it says. “The cost of accreditation could be beyond the capacity of some of these businesses and may result in some brokers leaving the insurance industry, reducing competition and access to risk advice, especially in regional areas.”

ICA says the committee may wish to consider how the cost of accreditation can be minimised for intermediaries such as brokers.

The submission raises a series concerns about extending the CDR to insurance, with companies holding a wide range of complex data as part of underwriting processes.

“While experience with CDR is largely in the context of banking, the extension of the CDR to insurance will pose unique issues,” it says. “In this regard it will be important for the Minister to anticipate a comprehensive process of consultation with the insurance industry.”