Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'
Consumer Advocates Criticise Insurers Over 'Poverty Premiums' and 'Loyalty Taxes'
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Consumer advocacy groups have voiced strong opposition to the insurance industry's decision to reject recommendations designed to eliminate practices that disadvantage consumers, including charging higher rates for monthly bill payments and increasing renewal premiums for loyal customers.
The Financial Rights Legal Centre has cited ongoing reports from consumers being adversely affected by these pricing practices, which they refer to as a "poverty premium" and a "loyalty tax."
The Insurance Council of Australia (ICA) recently published an action plan in response to 150 recommendations from the parliamentary floods inquiry and a comprehensive review of the industry code of practice. Despite the consensus among both reviews that insurers should not charge more for monthly payments than they do for annual ones, and renewal premiums should not surpass those offered to new customers, the ICA asserts that enforcing pricing policies is not within the code's remit due to competition law restrictions.
Continuous concerns have been raised about the code's enforceability and the numerous recommendations the ICA did not fully endorse. Financial Rights Legal Centre's Drew MacRae stated that around 38 recommendations are still under consideration, or have been delegated to individual companies to decide upon.
Financial Counselling Australia has expressed significant concern that the ICA's action plan does not actively address inequitable pricing practices. According to their disaster recovery co-ordinator, Louise Hayes, it is essential for insurers to address these unfair practices and incorporate them into the industry code to ensure accountability and equity.
While the ICA's action plan includes some positive initiatives, such as a framework for assisting vulnerable customers, it also drew criticism for lacking a firm commitment to enforceability. The recommendations from the inquiry suggested these policies should be embedded contractually within product disclosure statements to strengthen consumer protection.
Stephanie Tonkin, CEO of Consumer Action Law Centre, highlights the importance of rebuilding consumer trust, especially following the response to the 2022 floods. She stresses that the industry's focus should shift more towards customer welfare rather than profitability, with enforceable actions driving this change.
ICA CEO Andrew Hall noted that the action plan aims to guide industry changes over the coming years with a central focus on enhancing the customer experience. He acknowledged the necessity of collaborating with consumer advocates, regulators, and the government to tackle the underlying issues cited in the reviews.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
The latest review of the Life Insurance Code of Practice has put mental health cover at the centre of the national conversation about life insurance, disability insurance and income protection. Independent reviewer Peter Kell has completed his final report, outlining 85 recommendations aimed at improving customer protections, claims handling, communication, vulnerability support and the enforceability of the Code. - read more
APRA’s latest update to the general insurance reinsurance framework may sound like a back-office regulatory change, but it has practical relevance for Australian boat owners watching premiums, excesses and renewal conditions. Published on 7 July 2026, the reforms are designed to give general insurers better access to alternative reinsurance arrangements while keeping safeguards in place for policyholders. - read more
New analysis released by the Insurance Council of Australia has put renewed attention on a major cost pressure for NSW businesses: the emergency services levy, commonly known as the ESL. The levy is currently collected through insurance premiums, meaning businesses that choose to insure their assets can face a higher cost for doing so. - read more
New modelling released on 7 July 2026 has added momentum to the debate over how New South Wales funds emergency services, with analysis suggesting that removing the Emergency Services Levy from insurance premiums could deliver meaningful savings for many households and businesses. The findings, commissioned by the Insurance Council of Australia and prepared by Lateral Economics, support a shift away from loading the cost onto insurance policies and towards a broader property-based funding model. - read more
A new cybercrime update has put a timely spotlight on a risk that many beauty businesses still treat as secondary to slips, burns, allergic reactions or damaged equipment. The Australian Institute of Criminology’s latest Cybercrime in Australia report, released on 30 June 2026 and covered by Insurance Business Australia, found that cyber insurance uptake has fallen even as online threats remain widespread. - read more
As a business operating in Australia, understanding the ins and outs of public liability insurance is not just recommended, it's essential. This type of insurance serves as a safeguard, protecting your business against the financial repercussions of lawsuits and claims arising from third-party injuries or property damage due to your business operations. In a world where one unintended mishap can lead to costly legal battles, public liability insurance stands as your first line of defense. - read more
Public liability insurance is an integral safety net designed to protect businesses from the financial risks associated with lawsuits or claims. It provides coverage when a business is found legally responsible for personal injury to a third party or damage to their property. This form of insurance can significantly reduce the burden of legal fees, compensation claims, and other associated costs that may arise from unforeseen incidents. - read more
For tradesmen and trade professionals, venturing into the world of business comes with its set of challenges and risks. Among the myriad of precautions to consider, one critical safeguard stands out for its ability to protect both the tradesperson and their clients: Public Liability Insurance. This form of coverage is not just a safety net; it is a cornerstone of a responsible business practice within the trade industry. - read more
Running a small business in Australia comes with its own set of challenges and risks. One crucial aspect that should never be overlooked is insurance, particularly public liability insurance. The reason is simple: it offers essential protection against claims of property damage or personal injury caused by your business operations. - read more
Start Here !
Knowledgebase
Waiting Period: The time period that must pass after filing a claim before the insurance coverage becomes effective or benefits are paid.
No comments yet. Be the first to share your thoughts.