The Insurance Council of Australia welcomes the Johnson Report’s proposal to remove state insurance taxes and rationalise regulation, reasoning that “it draws much needed attention to the handicap that state insurance taxes place on the competitiveness and efficiency of the general insurance industry.”
The report by the Australian Financial Centre Forum, led by former Macquarie Bank chief executive Mark Johnson, listed 19 recommendations which have received support from the financial services industry.
The Insurance Council has undertaken extensive economic modelling work in order to demonstrate to its members the case for removing state insurance tax. It shows how these taxes encumber insurance consumers with additional costs making general insurance products less affordable. The council found that “as a result of state insurance taxes there is a detrimental impact on consumers taking out general insurance premiums in order to take individual responsibility for their own risk.”
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The Johnson Report also reveals the benefits of a single national regulatory system for general insurance. It’s a goal the Insurance Council supports while acknowledging it will require a significant and long term commitment to achieve. The requirements of harmonising different State and Territory statutory insurance schemes such as Workers’ Compensation would have to examined and appropriately considered.
“The general insurance industry looks forward to working with the Federal Government as it develops its response to the Johnson Report’s recommendations and strongly urges the Government to ensure that its response is in the interests of enhancing competition and efficiency in the general insurance industry.”
Freelance Business Writer