Labor Acts To Protect Small Business On Terrorism Insurance Stephen Conroy - Deputy Leader of the Opposition in the Senate, Shadow Minister for Finance, Small Business and Financial Services

Media Statement - 15 May 2003

Today the Senate passed Labor amendments to the Terrorism Insurance Bill 2003 to ensure that insurance companies cannot engage in price exploitation in relation to the introduction of compulsory terrorism cover.

Following the September 11 attacks insurers have withdrawn cover for loss or damage resulting from terrorist attacks. Labor accepts this market failure leaves financial institutions and property owners, including superannuation funds, exposed to potentially massive losses. Government intervention is required to address the problem.

The Government's scheme essentially obliges insurers to offer cover and compels commercial property owners including small business to take out terrorism cover.

However the Bill contains no mechanism to prevent insurance companies from taking advantage of the fact that terrorism insurance is compulsory to boost their profits at the expense of policy holders.

The Labor amendments passed by the Senate will empower the ACCC to prevent insurance companies from charging unreasonably high prices in relation to terrorism cover.

To assist insurance companies to comply with the law, the ACCC will issue guidelines about when prices are unreasonable.

The ACCC will also be given explicit power to monitor the cost of terrorism insurance cover.