The Insurance Council of Australia (ICA) has warned that extending the Consumer Data Right (CDR) to the sector could have adverse consequences if key issues are not addressed, as a Senate Committee considers a bill to parliamentary to strengthen the information sharing regime.
An ICA submission says insurance poses a range of unique issues around information sharing, the reform implications of the bill could impose heavy costs for brokers, and the broad consultation is required before entering the CDR into the insurance.
“It is also important for the government to consider the first experience of applying the CDR in banking and to allow enough time for the full implications of the CDR to become apparent before extending the CDR to insurance,” ICA said in a submission to Senate Economics Law Committee.
The committee is examining a bill to improve the existing CDR framework, which operates in banking, by introducing reforms in the “initiation of action” to facilitate processes such as payments, opening and closing accounts, switching providers and updating personal details.
The Government plans to roll out the CDR in other areas including financial services and insurance, and has previously indicated it will conduct separate assessments for different sectors.
The ICA submission says data collection differs from general insurance, products are often more diverse, complex and tailored, data may focus on assets rather than an individual, and on workers’ compensation or compulsory third parties. party, insurers are custodians of information on behalf of governments.
“In our view it is not appropriate for insurers to be required to provide this data directly to consumers or other parties as they are bound by the terms of their engagement with the government,” the submission said.
Sharing data on pricing and risk management can prevent investment in product development and innovation, while sometimes collecting sensitive personal data, such as about medical or vulnerability issues, that should be excluded, says this.
“We further note that this sensitive personal data, if shared incorrectly or decontextualised, may unwittingly ‘red flag’ consumers,” it said.
The ICA does not see a compelling case for extending the CDR to professional indemnity and other commercial lines of insurance, where brokers provide regulator comparisons that enable business clients to easily switch policies.
It also warned that the application of the CDR and the reforms in the bill are expected to require brokers to become Accredited Action Initiators, which could involve significant costs.
“This may be particularly acute for brokers who become Accredited Data Holders and/or Accredited Action Initiators, as they are often small businesses,” it said.
“The cost of accreditation may be beyond the capacity of some of these businesses and may result in some brokers leaving the insurance industry reducing competition and access to risk advice, particularly in regional areas .
“The committee may wish to consider how the cost of accreditation could be reduced for intermediaries such as brokers.”
The bill’s explanatory memorandum says the reforms allow consumers to direct identified persons to send instructions to initiate actions on their behalf, and expand the CDR from a data-sharing scheme. towards a method that allows consumers to act on the information they receive.
The committee is due to report on March 23.
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