NEW data collection and reporting proposals aimed at general insurance intermediaries will impose major compliance burdens on the industry, a legal insurance expert claims.
The new reforms, proposed by Treasury, require general insurance intermediaries to report every six months to APRA.
The requirement to provide aggregated data on general insurance contracts entered into with authorised general insurers, Lloyd's underwriters and unauthorised foreign insurers (UFIs) is a onerous reporting requirement, said Mark Radford, an insurance partner at law firm Colin Biggers & Paisley.
His comments comes as submissions to Treasury on the consultation paper, 'Reporting requirements for dealings with unauthorised UFIs and atypical risks', closed today.
The Treasury's proposal "significantly increases the burden on general insurance intermediaries", said Radford.
"Treasury has cited recent financial market turmoil and the need to understand the impacts of insurer failure as the driver for this proposal," he said.
"Even so, it's hard to grasp how such an extensive change could be proposed given the information required is not normally automatically captured by the systems used by many intermediaries and the costs of compliance and systems changes would likely significantly outweigh any benefits," he said.
"It's not clear that such a cost benefit analysis has been done," Radford said. “A large proportion of the data to be collected only appears to enhance data already collected by APRA from insurers.
"The value of this when compared with the compliance cost, impact on small businesses and possible flow on effect to consumers is questionable."
Radford added that the proposed start date for the measures appeared impractical.
"Given the scope of information covered and the systems changes requires, the proposed start date of 1 November is really impractical. There would be few intermediaries that would be ready to comply by that date, particularly since many are small businesses with limited resources," he said.
The Colin Biggers & Paisley partner said that because "stiff ASIC penalties" would apply, such as those who failed to comply would be considered to have breached their Australian Financial Services license, brokers, insurance agents and insurers acting for other insurers should review their capacity to meet the proposed requirements.