Consumer Action welcomes the opportunity to comment on the draft Key Facts Sheets for home building and home contents insurance policies.
Consumer Action continues to strongly support the introduction of key facts sheets (KFS) for consumer insurance contracts. As we have said in the past, we believe that KFSs are capable of:
- improving consumer understanding of what their insurance policy covers, recognising that very few people read and understand their PDS;
- allowing simpler comparison between competing insurance policies, increasing the likelihood that consumers will pick a policy that suits their needs and improving competition; and
- providing important information about under-insurance and how to avoid it—for example by choosing total replacement cover where it is affordable and available.
We broadly approve of the latest draft of the KFS, and we particularly welcome the decision to subject the draft to consumer testing. However, we have recommended some further minor amendments, including:
- that KFSs for both home building and home contents policies should list total replacement cover as one of the types of cover available—at present only the home building KFS mentions the total replacement option;
- the wording in Step 4 of the KFS should be amended to more clearly explain the benefits of total replacement cover and the risks of underinsurance with sum-insured and sum-insured plus margin cover.
- subregulation 4C(2) should include more detail to be clear that a KFS should be provided whenever an insurer enters into a contract with a consumer, or when a consumer requests a quote or information about a policy;
- subregulation 4C(3) should be amended to require insurers to provide a KFS within one clear working day.
To read our full submission, click here: Key Facts Sheets for Home Building and Home Contents Insurance Policies.