Regulation is costing insurance customers up to $3.5 billion each year and is a having a major impact on productivity, according to a new report released today by the Insurance Council of Australia (ICA).
report shows that regulation is costing between $2.5 billion and $3.5 billion a year, with more than 30,000 regulatory obligations enforced by 25 different authorities under 300 different regulatory instruments.
Much of this cost relates to reporting and governance obligations, with the major regulatory costs stemming from data reporting, privacy and cyber, claims handling, sales and distribution, and breach reporting.
The report finds that 66 per cent of the regulations governing insurance are prescriptive, dictating how insurers must comply rather than the outcome they must achieve.
This can stifle innovation, disproportionally impact smaller insurers, and lock customers into inflexible process that provide little benefit.
The report identifies the practical steps that regulators could take to make regulation more effective and less costly, including consolidating duplicative provisions, aligning definitions across legislation and regulation, and coordination across regulators and agencies. For example, changes can be made to:
