At the Insurance Council of Australia’s (ICA) Annual Conference on Oct. 10, Australian Securities and Investments Commission (ASIC) commissioner Alan Kirkland (pictured) addressed insurance professionals, focusing on the sector’s current risks and the path forward for consumer trust and operational resilience.
Kirkland opened his remarks by acknowledging the Gadigal people of the Eora Nation and recognising the leadership of the ICA board during a period marked by significant industry challenges.
He highlighted recent collaborative work with CSIRO on artificial intelligence, noting the sector’s efforts to ensure that technological advancements do not compromise consumer outcomes or erode trust.
A key development, Kirkland said, is the move to make the new General Insurance Code of Practice contractually enforceable.
“Insurance is a promise – and promises have to mean something,” he said.
Kirkland reflected on the sector’s experience since the Hayne Royal Commission, noting that the analogy of “pitching a tent in the middle of a hurricane” remains relevant as the industry continues to face new and recurring risks. He pointed to climate change as a growing threat, not just to individual insurers but to the viability of insurance as a whole.
Referencing the National Adaptation Plan released by the federal government, Kirkland said the vulnerabilities of the insurance sector and the broader financial system are increasingly apparent.
He cited data showing nearly one million claims and over $20 billion in insured losses in Australia over the past five years. Projections suggest that one in 25 Australian homes could become uninsurable within the next five years due to climate-related risks.
Recent events, such as ex-Tropical Cyclone Alfred, resulted in more than $1.4 billion in claims, highlighting the scale of losses and the ongoing pressure on claims management and premium affordability.
Kirkland addressed the issue of consumer trust, referencing findings from the House of Representatives Standing Committee on Economics, which investigated claims handling after the 2022 floods. The report noted that some policyholders felt adversarial dynamics with their insurers during times of crisis.
He also cited testimony from David Norris, a long-term policyholder, who expressed disappointment in the perceived lack of reciprocity from insurers after decades of loyalty.
Kirkland said these experiences contribute to a broader trust gap, with reputation surveys placing insurance among the least trusted industries in Australia.
Despite these challenges, Kirkland noted that some insurers are making progress in claims handling and customer support.
He referenced improvements identified by the Australian Financial Complaints Authority (AFCA) and ASIC’s follow-up reviews, including the establishment of dedicated claims programs, single points of contact for customers, and enhanced support for vulnerable policyholders.
Some insurers have appointed consumer advocates and formed specialist teams to address the needs of vulnerable customers, sometimes involving external expertise.
Kirkland emphasised the importance of understanding customer experiences to identify and address barriers in the claims process.
Looking ahead, Kirkland outlined two regulatory priorities for ASIC in the coming year. The first is a review of how insurers communicate car insurance premiums, an area generating significant consumer complaints.
The second focus is on the use of cash settlements, particularly following natural disasters, where some consumers have accepted inadequate offers due to exhaustion or lack of alternatives.
Kirkland concluded by urging the industry to ensure that the new General Insurance Code of Practice delivers substantive consumer protection.
“Promises without accountability are essentially empty commitments,” he said, calling on insurers to adopt a code that meaningfully addresses customer needs and expectations.
He closed by acknowledging the sector’s resilience and the ongoing need to adapt, stating that a robust code of practice is essential for rebuilding trust and supporting both the industry and the communities it serves.
