ICA warns of broker effects from data sharing reforms
9 March 2023
The Insurance Council of Australia (ICA) has warned of potential ramifications for brokers from reforms that will provide a greater role for intermediaries under new consumer data sharing reforms.
The Consumer Data Right (CDR) has already started in banking, with insurance flagged for future introduction after further consultation, but its use is quite limited.
A Federal Parliament committee is examining a bill that would add third-party “Action Initiation”, allowing consumers to allow others to access data on their behalf and potentially expand information sharing among sector designated by the Minister.
ICA says in a submission to the Economics Legislation Committee that brokers often hold relevant consumer data and CDR applications and that provisions contained in the bill are expected to require brokers to become Accredited Action Initiators.
The ICA says it understands the cost of accreditation under the existing Act can be substantial for Accredited Data Holders.
“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 ICA said the committee might want to consider how the cost of accreditation could be reduced for intermediaries such as brokers.
The submission raises a series of concerns about the expansion of CDR in insurance, with companies holding a wide range of complex data as part of underwriting processes.
“While experience with CDR has been largely in the banking context, extending CDR to insurance will present unique issues,” it said. “In this regard it will be important for the Minister to anticipate a comprehensive consultation process with the insurance industry.”
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