Insurance companies would have to explain why policy prices are increasing and by how much in new measures being considered by the federal government, reports suggest.
The Daily Telegraph reports that changes to insurance policies could be
introduced by Treasury in a move to make pricing transparent and drive
competition, after a similar trial in the UK led to 18% more people
negotiating a better deal or switching providers.
The news outlet quotes Financial Services Minister Kelly O'Dwyer, who says the current disclosure rules make it difficult to
"The government looks forward to working with the industry on these
reforms as it has an important role in improving the information provided
to consumers," she says.
The move could undermine a practice the Australian insurance industry has been suspected of, known as 'price optimisation'. It would involve insurers hiking prices up, not only based on the risks involved, but also based on what a big data analysis indicates they could get away with.
Last year's inquiry into the insurance industry found home insurance
premiums have grown several times faster than wage growth. Home
insurance rose 8.3% each year, compared to the 3.4% annual rise in wage
growth over the 15-year period to 2016.
The inquiry also found the market is dominated by two major companies,
Suncorp and Insurance Australia Group.