Coalition Pledges to Cut Insurance Capital and Compliance Costs

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.

The Coalition has proposed significant changes to the insurance sector's capital requirements and regulatory compliance, a move supported by the Insurance Council of Australia (ICA).

This pledge comes in the lead-up to the federal election, with shadow treasurer Angus Taylor detailing the plans that aim to alleviate the industry's financial pressures.

The ICA has expressed approval, acknowledging the importance of regulation in protecting consumers and building trust in the industry. However, it highlighted the strain that rapid regulatory reforms over the last ten years have placed on resources, which in turn increases costs for customers. The proposed adjustments to capital liquidity rules could enhance productivity and cut consumer expenses, which insurers have long advocated for.

According to Angus Taylor, the financial services sector faces compliance costs exceeding $1 billion, with Australians remaining underinsured and underadvised. Taylor emphasised the need for a balance in APRA's (Australian Prudential Regulation Authority) capital rules to ensure stability while improving access to finance for households and businesses. The goal is to reflect risk more accurately in insurer portfolios, reducing consumer costs and unlocking capital for investment, all while maintaining financial stability.

Expert insights from Scott Duncan, a Taylor Fry actuary, highlight challenges such as natural disaster impacts and building material cost inflation on home insurance. Duncan suggests that while capital requirements are essential, they become secondary to these factors. Current prudential standards ensure insurers hold sufficient capital against rare catastrophic events, allowing for potential higher-risk investments.

As regulatory frameworks assess the alignment of assets and liabilities, the asset risk charge mechanism remains vital. The experience of recent catastrophic events underscores the rapid changes in liabilities and the significant impact they can have, reinforcing the need for adaptable regulatory approaches.

Published:Wednesday, 26th Feb 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

The Financial Perils of Travelling Uninsured: A Wake-Up Call for Australians

12 Mar 2026: Paige Estritori

Recent research has unveiled a concerning trend: 14% of Australian travellers embark on international journeys without any form of travel insurance. This statistic is even more alarming among younger travellers under 30, with nearly one in four opting to travel uninsured. Such decisions expose individuals to significant financial risks, especially when unforeseen events occur abroad. - read more

IAG CEO Predicts Ongoing Insurance Premium Rises

12 Mar 2026: Paige Estritori

Insurance Australia Group (IAG) has reported a significant 91% increase in net profit for the first half of the 2025 financial year, reaching $778 million. This surge is largely attributed to favourable weather conditions and a reduction in claims. Despite this positive financial performance, IAG's CEO, Nick Hawkins, has indicated that insurance premiums are expected to continue rising, albeit at a slower pace than in previous years. - read more

APRA Data Reveals Steady Performance in General Insurance Intermediaries

12 Mar 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has released its latest bi-annual report on intermediated general insurance, providing insights into market activity for the six months ending June 2025. The data indicates a stable performance among general insurance intermediaries, with total premiums invoiced through intermediaries reaching $21.5 billion. Of this, $17.6 billion was placed with APRA-authorized general insurers, $2.6 billion with Lloyd’s underwriters, and $1.3 billion with unauthorized foreign insurers. - read more