Treasurer Josh Frydenberg has vowed to press ahead with tougher new laws on the insurers, in the wake of damning findings into general and life insurers uncovered by the royal commission.
Mr Frydenberg has faced criticism from Labor for delaying a planned roll out of the new laws, since Kenneth Hayne’s probe uncovered allegations of wrong doing by insurers in unfairly assessing and paying out claims, including Allianz, Suncorp and Youi.
The Treasurer told The Australian Financial Review the government had previously flagged changes and was awaiting recommendations from the royal commission before finalising the new rules.
“It was the Coalition Government, not Labor, who said it was important to have insurance in the terms of reference for the royal commission,” Mr Frydenberg said.
“We have announced a number of reforms to the insurance industry which will address areas of misconduct identified at the royal commission.
“This includes removing the exemption for Insurance Claims Handling the Corporations Act, extending application of Unfair Contract Terms laws, introducing penalties for breaches of the ‘utmost good faith’ provision and introducing more effective disclosure for general insurance.
“Some of these reforms are in the process of being legislated and some others are waiting for the recommendations from the royal commission before implementation.”
Former financial services minister Kelly O’Dwyer has earlier flagged amendments to the laws, but the government had not implemented them.
Shadow financial services spokeswoman Clare O’Neil will attend the commission’s hearing in Melbourne on Friday and call on the government to explain why it has delayed giving the Australian Securities and Investments Commission the power to properly regulate claims handling in insurance.
Unlike other financial services, the Corporations Act has an exemption for insurance claims handling.
Life and general insurance is also exempt from the Unfair Contract Terms laws.
ASIC has pushed for tougher laws to hold insurers accountable but the government so far has not implemented changes.