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Senator Nick Xenophon’s proposal for an insurance comparison service is inexpensive. Picture: AAP
EXCLUSIVE: The cost of creating genuine competition in the home and car insurance market can be revealed for the first time — and it is just 10 cents.
As a majority of consumers report it’s too difficult to compare insurance products — and thousands call for a comprehensive, government-run comparison website to fix the problem — it has emerged that the bill to set up the most sophisticated such site in the world, Norway’s Finansportalen, was just $2.2 million. That’s less than 10c per Australian.
Two similar sites the Federal government already runs cost even less.
Finansportalen has been cited by Australia’s corporate regulator, ASIC, as an example of how to “drive competition†and “enhance competitionâ€. Its annual running costs, which are less than the set-up price, are met from the public purse. But other nations such as Ireland fund theirs with a tiny levy on financial services providers.
The costings are found in a World Bank report which says government-run comparison sites are better than those that are privately run because of their “objectivity and transparencyâ€, “greater number of products and providers†and “complementary financial guidance and educational toolsâ€.
In other words, they overcome all the objections Big Insurance has.
Many consumers want increased competition among car and home insurers.Source:Supplied
None of the four largest insurers currently participates in privately run comparison sites, some of which showcase policies sold by their owner.
A spokeswoman for one of the four, QBE, said it wouldn’t until they “can adequately reflect the total value of a policy, rather than focusing on priceâ€.
The industry has been attempting to force the proposal’s chief political proponent Nick Xenophon to dump his move to have the Senate Economics committee draw up plans for a government-run site. He’s taken that as indicating he’s on the right track.
Nick Xenophon Team leader Senator Nick Xenophon during a motion in the Senate. Picture: AAPSource:AAP
Within the Government there is caution partly due to fear of a repeat of Kevin Rudd’s ill-fated Grocery Choice and Fuel Watch proposals.
But there is an acknowledgment of the success of the government-run health insurance comparison service, privatehealth.gov.au, which is more akin to what a general insurance comparison service would be like. It costs $145,000 a year to run and $1.4 million to set up.
The cost of building and running the government’s North Queensland home insurance comparison site for three and a half years is $3.1 million.
In the past two weeks, more than 5000 people have signed petitions calling on Financial Services Minister Kelly O’Dwyer to establish a general insurance comparison site.
Prime Minister Malcolm Turnbull listens to Kelly O'Dwyer during a recent Question Time in Canberra. Picture: Ray StrangeSource:News Corp Australia
Most have done so while registering their support for the Big Insurance Switch, which is seeking to extract a group discount on home and car cover.
A One Big Switch survey of more than 5000 consumers has found 70 per cent find it too hard to compare insurance products.
Those who had never changed cover providers were asked why. The difficulty of sizing-up competing offers was the number-one reason.
To sign the petition and for more information on the Big Insurance Switch go to www.onebigswitch.com.au.
There is no obligation to take up any offer. News Corp Australia and One Big Switch will earn a commission from any accepted deals. News Corp is a shareholder of One Big Switch.