The Emergency Services Levy Insurance Monitor (ESLIM) is an independent statutory authority, formally established in June 2016. Under section 11 of the Emergency Services Levy Insurance Monitor Act 2016 (the Act) the Monitor is required to provide the Treasurer with a quarterly report on the performance of the functions of the Monitor, within 28 days after the end of each quarter. As soon as practicable after receiving the report, the Treasurer has the obligation to publish the report. This obligation is met with the publication of the quarterly reports on the Monitor's website.
ESLIM Report 16, quarter to 31 March 2020 [PDF size:2,097 KB]
ESLIM End of office review
The Monitor has now reached the end of his term in office.
This report has been prepared by the Monitor and Deputy Monitor. It outlines the background and context of the reform, provides insights into the property insurance industry in NSW, and highlights the key contributions and achievements that have been made by the Monitor and his staff, over the past four years. We have sought to provide a frank account of what has transpired over our term in office and how we saw events unfolding, with the intention that it will provide useful insights to the NSW Government and other interested parties
ESLIM End of office review (Pdf size: 1,540KB)
Consumer engagement, empowerment and detriment in home insurance
The Monitor commissioned Woolcott Research & Engagement, in combination with the Centre for International Economics, to undertake a study about consumer engagement and confidence in the home insurance market. The research sought to investigate the home insurance decision making process, the extent to which consumers feel capable of making comparative evaluations and the incidence and nature of problems experienced by policyholders.
The survey report is attached below (Pdf size:1,706KB) .
The research was conducted in two phases. The first phase was a population definition pre-survey with a representative sample of n=1001 respondents, to identify the characteristics of those with home insurance, in order to set quotas for the main survey. This pre-survey was also used to briefly explore respondents' reasons for not having (or having) home insurance and to obtain a sense of the proportion of people who have had problems with their insurer on the last two years, to ensure that there would be a sufficiently large sample for the measurement of consumer detriment in the main survey.
The main survey was a mixed mode online and telephone (CATI) survey resulting in n=2001 completes. To qualify, respondents had to reside in NSW, have home insurance (buildings and/or contents) and be the main or joint decision maker regarding home insurance.
Low consumer engagement
Consumers base purchase decisions on price (57%) and reputation (46%) of the insurer - often with very little analysis of policy detail.
- 52% renew automatically
- 58% have always been with the same insurer
Most do not think they could get a better deal elsewhere. However, those who rated themselves as more knowledgeable about insurance were more likely to think they may be able to get a better deal.
Despite price being a key decision factor, two thirds were not sure of their premium or excess amount.
Most have heard of the ESL (69%) but only 13% had some idea of its impact their policy.
Consumer empowerment index
The findings from the survey also suggested that home insurance consumers were not informed and do not feel empowered. Only 17% claimed to feel very informed, and 50% gave a low rating about their knowledge of policy details. A simple empowerment index was created to help understand the characteristics of confident and vulnerable consumers. Large differences were found between the least and most empowered.
Consumer detriment refers to the loss experienced by individual consumers in situations where a product or service falls short of expectations. A series of questions were asked to understand experiences compared with expectations in the last two years.
- 10% reported insurers falling short of their expectations
- 17% of these took no action
- 68% experienced moderate or greater levels of stress
Consumer detriment in NSW was estimated at $208 million, but could be up to three times more if the costs associated with emotional stress was taken into account.
ESL reform and consumer awareness surveys
In 2019 the Monitor commissioned JWS Research to measure changes in consumer awareness of: the ESL and recent ESL reforms, the Insurance Monitor and its functions, insurance policies, insurers and the renewal process, and attitudes in relation to the Monitor's new pricing disclosure requirements.
The project comprised two consumer surveys: an initial benchmark survey conducted in May 2019; and a subsequent evaluation survey conducted six months later in November 2019.
May 2019 survey (Pdf size: 1,244 KB)
November 2019 survey (Pdf size: 2,400 KB)
For each survey, the sample size included 1,000 NSW insurance policyholders (both motor vehicle and home and contents policyholders). Survey quotas applied for age, gender and location, including from regional NSW.
The surveys were offered online and took approximately 15 minutes to complete.
The surveys sought to establish a baseline measure, and capture changes in awareness, attitudes and behaviour over the first 6 months of the new pricing disclosure requirements.
The November 2019 survey also sought to measure consumer awareness of the Monitor's mid 2019 media campaign, designed to coincide with the new pricing disclosure requirements for renewal notices. Data provided below is fro the November survey, unless otherwise stated.
Awareness of the price comparison order
Awareness improved and most participants agreed it encourages shopping around and questioning of insurers:
- consumer awareness of the price comparison improved from 21% (survey 1) to 32% (survey 2)
- more than 1 in 3 recall seeing the price comparison on their statement. Of these 81% see it as a positive move.
Awareness of the ESL and reforms
A majority of policyholders are aware of the ESL (72%) and the proposed reform, but few know of the reform's deferral.
- 56% are aware of the reform was proposed, but only 43% of its deferral
- 50% were aware that ESL funds fire and emergency services.
Awareness of the Insurance Monitor
Awareness of the Monitor is in line with other government organisations or a similar size and profile:
- about 20% of participants were aware of the Monitor, of which 62% were broadly aware of at least one aspect of the Monitor's role
- only 25% were aware of the Monitor's status as an independent body. 30% saw the Monitor as a Government department.
Recall of the Monitor's media campaign was relatively high for the organisation and campaign size.
Policyholders claim to be reasonably well informed and engaged with their motor and home insurance policies. Most purchase insurance directly from the insurer (74% for home and 81% for motor insurance) and have remained with their insurer for more than 3 years (73% for home and 67% for motor insurance).
NSW Bushfire Inquiry
The NSW Government commissioned an independent expert inquiry into the 2019-20 bushfire season to provide input to NSW ahead of the next bushfire season. The Monitor, Professor Allan Fels AO, and Deputy Monitor, Professor David Cousins AM provided a submission based on their observations of the practices of general insurance companies, gained principally through their roles in reforms to insurance-based levies, as well as knowledge and experiences of customer protection, competition and policy and regulatory matters across a number of industries over their professional careers.
The submission was made in their private capacity and does not reflect the views of the NSW Government. Attached below is the submission and accompanying attachment.
Submission to the NSW Bushfire Inquiry:
Attachment to the submission: Impact of Levy Reforms on Insurance Take-up
National Royal Commission into Black Summer bushfires
A national Royal Commission into Australia’s devastating Black Summer bushfires has been established. Information and feedback from states and territories was sought and the NSW ESL Insurance Monitor Professor Allan Fels AO, and Deputy Monitor Professor David Cousins AM provided to the Royal Commission, a copy of their submission to the NSW Bushfire Inquiry.
The submission provides their views on a range of issues relevant to the Royal Commission into National Natural Disaster Arrangements, in particular:
- the current system for fire and emergency services funding in NSW
- the affordability of insurance in NSW, and
- consumer behaviour in relation to insurance pricing.
The submission was made in their private capacity and does not reflect the views of the NSW Government.
Submission to the National Royal Commission into Black Summer bushfires (and NSW Bushfire Inquiry):
Attachment to the submission: Impact of Levy Reforms on Insurance Take-up
Federal Financial Relations Review
In order to ensure the state maintains a stable and reliable revenue base to fund essential services and infrastructure the NSW Government has commissioned an independent review of the State's revenue system as it relates to federal funding and its interactions with the state tax system.
Attached below is the consultation discussion paper and the consultation Findings Report.
NSW Review of Federal Financial Relations: Discussion Paper - October 2019
NSW Review of Federal Financial Relations: Consultation Findings - February 2020
Discussion Paper: Pricing differences: New vs existing customers
Through its price monitoring of ten major insurance companies, the Insurance Monitor has identified a difference in premium prices charged to new customers compared with customers who renew their combined home and contents insurance policies with their existing insurer.
The attached discussion paper aims to assist in promoting informed discussion around the findings of the Monitor's study and seek feedback from interested parties, including the general public.
The consultation has now closed.
Submissions may be viewed here.
Insurance Premium Survey
The Insurance Monitor has been monitoring home and contents insurance premiums from 12 insurance brands on a monthly basis since October 2016.