The Australian Consumers Insurance Lobby (ACIL) has warned that the Australian Competition and Consumer Commission (ACCC) could face ongoing reputational risk if it authorises an Insurance Council of Australia (ICA) proposal to standardise certain home insurance terms through an industry‑coordinated process. ACIL said it backs the goal of consistent wording in home and contents policies but opposes allowing insurers to lead the development of standard definitions for terms that directly influence coverage decisions and claims outcomes. “We support standardising definitions in insurance. Inconsistent wording is a major driver of consumer confusion and disputes. But this cannot be led by the industry. These definitions go directly to whether claims are paid or denied,” ACIL chairperson Tyrone Shandiman said. The comments relate to an authorisation application lodged by the ICA with the ACCC on March 30, 2026.
The ICA has applied for ACCC authorisation, on behalf of itself and its current and future members that offer home and contents insurance, to coordinate around two elements. First, participating insurers would adopt and give effect to shared definitions of “taking reasonable steps to maintain” and “wear and tear” in home insurance contracts. Second, the ICA and participating insurers would each run public education campaigns to explain the agreed definitions to policyholders and the broader community.
Authorisation is sought for a period of five years. If granted, it would provide protection from certain competition law provisions for the conduct specified in the application. The ACCC began public consultation on April 2, 2026, and has invited submissions on the application by April 23, 2026. Under the regulator’s indicative timetable, the ICA is expected to respond to issues raised in submissions in April and May, with a draft determination planned for June or July. Further consultation, including a possible conference, would follow before a final determination targeted for August or September.
ACIL has focused its submission on the two proposed standard definitions, stating that they often sit at the centre of disputes about property damage claims, particularly where questions arise about maintenance or gradual deterioration. Shandiman said the terms cannot be treated as neutral drafting tools. “These definitions sit at the heart of claim denials. Small changes in wording can have a significant impact on outcomes for consumers,” Shandiman said. Common wording on maintenance obligations and wear‑and‑tear exclusions may support more uniform product drafting, disclosure, and claims practices across the home and contents market. For consumer groups, the precise scope and application of those terms – including how they interact with event-based damage – may affect denial patterns, complaint volumes, and perceptions of fairness.
ACIL has also raised concerns about whether the ACCC has sufficient technical insight into insurance law and claims handling to fully probe industry‑drafted wording before granting authorisation. “The insurance industry has deep technical expertise in how these terms operate in practice. Based on our experience engaging with the industry across multiple government inquiries and related processes, we do not have confidence that an industry-led process will prioritise the interests of consumers over those of insurers. Without independent review of equal capability, there is a real risk the ACCC is being asked to approve something it cannot fully interrogate,” Shandiman said. The organisation has argued that standard definitions, if pursued, should be developed under the leadership of Treasury or the Australian Securities and Investments Commission (ASIC) rather than the industry body. It is also calling for an independent expert review of consumer impacts before any standard wording is implemented.
Beyond the wording itself, ACIL has warned that an ACCC authorisation may be relied on by insurers when defending contested outcomes if disputes later arise over the interpretation of the standard definitions. “Most insurers want to do the right thing. But there are bad actors in this industry. Those actors will use any ambiguity to minimise claims. If these definitions carry ACCC approval, they will rely on that endorsement to justify outcomes that are technically arguable but unfair,” Shandiman said.
ACIL said this could have consequences beyond individual disputes. “There is a real risk the ACCC is seen as endorsing the very framework being used to deny claims. That exposes the regulator to ongoing reputational damage,” the organisation said. The outcome of the authorisation process is likely to influence how far collective standard‑setting on policy language is permitted under competition law and how regulators weigh claimed benefits from clarity and education against the risk of coordinated approaches to exclusions and insureds’ obligations.
