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Fels hits back at ICA

August 30, 2018

NSW Emergency Services Levy Insurance Monitor Allan Fels has hit back at the Insurance Council of Australia’s call for a rethink of his role.

Insurance Council CEO Rob Whelan recently told a NSW parliamentary inquiry that information requirements imposed by the monitor are extensive and costly to meet. He also said insurers are paying for the monitor’s work – a claim Professor Fels has rejected.

“Insurers, in fact, have not been charged one cent of the monitor’s cost,” Professor Fels told the same inquiry last week. “They do not pay for us. Also, on this compliance issue, it is true we have been requiring insurers to provide us with the necessary data… but I believe compliance costs are quite small.”

Professor Fels, whose abrasive approach to the industry as the monitor in Victoria and now NSW has been an ongoing source of irritation to insurers, says the monitor’s role remains important – even after the NSW Government dropped plans to switch to a property-based fire and emergency levy last July.

Insurers have not been clear in communicating with consumers how the ESL reinstatement will affect premiums, he says.

“Another important function, which is ongoing, is to make sure insurers do not collect more of the levy than is necessary to fund their contribution liabilities – the overcollection issue – and receiving complaints and so on.

“So we believe the price monitoring we do is helping or should help keep insurers honest.”

Meanwhile, Fire Brigade Employees’ Union Senior Industrial Officer Chris Read took aim at the industry’s “free riders” argument that an insurance-based emergency services funding scheme is unfair on consumers who take out home protection.

“The elephant in the room for us with the free riders argument is, by proceeding with the changes proposed… that actually turns the insurers into free riders themselves, the largest free riders of the lot,” Mr Read told the inquiry.

“There is a real concern for the union about letting the insurers off for hundreds of millions of dollars for a service they directly benefit from.” 

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