TRAVEL insurance has found its way into the deep dark world of the new compliance industry that has formed off the back of the Hayne Royal Commission (the banking commission). While it is early days, AFTA will be taking a lead role to ensure that sensible fit-for-purpose changes, which may be forthcoming to enable the travel industry to participate in an appropriate way, ensures that Australians taking an overseas holiday get the right insurance for their trip.
The Hayne Report has identified a number of changes that the government is considering for the “general insurance” category and travel insurance falls into this bucket. Travel Insurance is a AU$1.3 billion industry. That’s a lot of money and whether for the right or wrong reasons, travel insurance and the sale thereof have fallen into the sights of ASIC and the Federal Government. A discussion paper has already been released by Federal Treasury to consider the current selling arrangements for travel insurance and how the industry is structured, sales are made, the process of the sale and remuneration structure.
It also covers how best to ensure that the way this all works in the future is in line with the general reforms the government is looking for within the “general insurance” arena. On first read of this treasury paper, panic may set in. I am not trying to be an alarmist, but the industry may be facing a challenge as this process unfolds.
Fortunately, AFTA is in the box seat to look to inform the government, assist in reviewing the processes and help to guide and advocate for sensible reform that will ensure all stakeholders are treated fairly in the end. Like most reforms of this nature and when it is in the early stages, it is always a bit of a worry as the most important thing is to ensure that the truth, facts and the real world are considered. AFTA did not go looking for something new to think about and work on, but as is so often the case, these things seem to just sneak up and surprise everyone.
As this process unfolds we will be sure to keep the industry as informed as we possibly can and work to ensure that the end result is one that we can all live with. Stay tuned, who would have ever thought that the simple act of selling travel insurance could cross swords with a government reform. One good thing in our favour is that the federal govt in the form of DFAT pushes the line – if you can’t afford travel insurance, you can’t afford to travel.
We hope that this will continue to be the case and that travel agents are best placed to support and assist travellers in considering the best options for travel insurance.