In Australia, insurers are being challenged by the regulator (APRA) to increase transparency, with its Executive Director of Insurance Sean Carmody saying a more transparent industry is a more trusted industry.
In a speech, where he shared his perspectives on the current state of the industry in Australia, and the actions that can help underwrite a strong future, Carmody told the industry that APRA and the Australian Securities and Investment Commission believe transparency is “…critical to improving a range of consumer outcomes”.
As to what the regulators mean by transparency in insurance, Carmody says it includes being clear on:
- What is, and is not, covered by a policy
- The factors that drive consumers’ premiums
- Which mitigation actions by consumers will, or will not, reduce premiums
- How insurers will use information provided, such as the results of genetic tests
Carmody says a lack of transparency erodes trust “…which undermines the effectiveness of communication. Over time, an investment in greater transparency can help to build trust”.
He notes too that product innovation “…also has the potential to help address the protection gap and is another area that could benefit greatly from transparency”.
To design sustainable products that work for Australian insurers and their customers, he challenges the industry to:
- Design products and services that are of demonstrable value to the community
- Ensure these products reach the most suitable target market: be clear who the product is designed for
- Simplify your products and processes and review them regularly to adjust to changing consumer needs
- Use plain English product disclosures and don’t hide the devil in the detail
- Be fair and clear in your pricing, ensuring it aligns with good product features
- Ensure you have a clear, open, empathetic, fair and speedy claims process.
He concludes that the industry is on the right track with the basics of good insurance risk management.
Click here to read Carmody’s full address.