‘Tidy up this mess’: Dutton doubles down on threat to nation’s insurers

Doubling down in his threats to the insurance industry, the Opposition Leader called for the sector to cut premiums or face the threat of market intervention.

Peter Dutton in Brisbane on Monday. Picture: NewsWire / John Gass

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Peter Dutton has doubled down in his attack on the nation’s insurers, demanding the industry move to slash premiums or face market intervention after the sector dismissed accusations it had priced its customers out of coverage.

The Opposition Leader on Sunday threatened to expand the Coalition’s existing divestiture policy to cover the insurance ­industry, warning that major companies may need to be broken up to ensure greater competition and that customers received value for money.

But the Insurance Council of Australia, which represents major insurers including Allianz, AAMI, QBE and IAG, argued that profits across the sector were coming under increasing strain and claimed it generated just $1.50 in profit for every $100 it collected in premiums from policyholders.

That number, according to ICA analysis, was down from $5 a decade ago.

On Monday, Mr Dutton hit back, declaring he had put the industry “on notice”, and stated he expected significant reductions in insurance premiums after the election in the event the Coalition formed government.

“If they don’t, then I will deal with the industry afterwards because we can’t have people who can’t afford to insure against public liability,” he told reporters in Brisbane.

“We’re going to act on it if the insurance companies don’t tidy up this mess.”

Earlier, Nationals leader David Littleproud clarified that Mr Dutton’s threat did not constitute opposition policy, and suggested the comments reflected the Coalition’s commitment to ease heightened living costs.

“What Peter Dutton has said (is) we are prepared to use whatever policy lever we need to ensure that Australia’s cost of living, and consumers, are being treated fairly,” Mr Littleproud told ABC Radio.

Seizing on Mr Littleproud’s comments, Jim Chalmers claimed the Nationals leader had “shafted” Mr Dutton given his more tacit ­endorsement of the proposal.

“Peter Dutton’s so-called policy didn’t last 24 hours,” the Treasurer said in Canberra.

“When you can’t get the ­National Party over the line on something then you’ve got a ­problem.”

When Mr Dutton unveiled the divestiture proposal, the measure represented a significant policy victory for the junior Coalition partner over the Liberal Party, which has traditionally eschewed government intervention in the private sector.

The profitability of the insurance industry is likely to come into further focus in coming months, with analysts expecting the cost of claims to rise modestly, fewer extreme weather events, and elevated premiums to support the sector.

Insurance Australia Group, one of the sector’s largest players, last week reported it had nearly doubled its net profit in the six months to December to $778m, a 91 per cent increase on the same period a year prior, after booking several losses in previous years.

Responding to Mr Dutton’s claims, Insurance Council chief executive Andrew Hall said while there was no “silver bullet” to ease the cost of premiums, the industry could reduce premiums by partnering with government.

“This problem can only be solved through some sort of compact or partnership with government,” he said, pointing to the $7bn states collected in taxing insurance products.