from Crikey .....

Former NRMA director: insurance industry hiring "a conga line of spin doctors"

Crikey senior journalist Andrew Crook writes:

FLOOD INSURANCE, IAG, INSURANCE, INSURANCE INDUSTRY, NRMA, QUEENSLAND FLOODS

A former NRMA Insurance director has accused his old firm of engaging in secretive government lobbying efforts, telling Crikey a "conga line of very expensive spin doctors" had been descending on Canberra and Brisbane in recent weeks to bend politicians' ears in the wake of the Queensland floods.

Richard Talbot, who served as an NRMA Insurance director before its demutalisation in 2000, said that the industry is feverishly trying to sandbag its profits prior to Anna Bligh's commission of inquiry and assistant treasurer Bill Shorten's promised national reforms to the industry.

"They've all got access to the relevant minister and are able to bend their ear to ensure laws aren't changed in any way. Anyone who claims the reforms would have a negative effect on insurance company profits - and executive bonuses - is sure to get a guernsey."

"There's all sorts of lobbying going on in stealth mode, it's not something that generally speaking that would be put before a board. The CEO and perhaps one other employee would approve the payments under the radar without anyone else knowing."

NRMA Insurance is now a brand of the massive Insurance Australia Group, with the firm copping criticism after Lockyer Valley flood victims discovered they weren't covered for damage caused by rising rivers.

In addition to NRMA, IAG also controls the former Western Australian and South Australian general insurers, both purchased from the taxpayer in 1998.

Talbot, who spearheaded NRMA's push to properly compensate policyholders with ex-gratia payments following the 1998 Wollongong Floods (despite the initial objections of then-President Nick Whitlam), said much of the recent lobbying effort has been channelled through the Insurance Council of Australia which, according to the Queensland government lobbyist register, lists PR czars Jackson Wells as its proxy in the halls of power.

The peak body is keen to halt a national floods insurance scheme in the mould of New Zealand and the United States, citing the potential to inhibit market competition. And although supportive of Shorten's move to mandate a common industry flood definition, they have also argued for caveats to be inserted after the fact.

Talbot, who is highly regarded across New South Wales as a champion of consumer rights, slammed industry opposition to a general government-run fund:

"I don't know why they are so much against a general fund...I think it's because they like control of the money themselves. In a general fund setup by the government they would lose control of the money."

A spokesperson for IAG told Crikey the company's representatives had met with local, federal, Queensland governments following the floods and that the interactions had been widely reported. A spokesperson for the ICA said Jackson Wells has not been involved in lobbying politicians in Queensland or Canberra following the deluge, but that its members had held discussions with some MPs.

Fiona Guthrie from the Australian Financial Counselling and Credit Reform Association agreed that while insurers have been extremely active in recent weeks, Shorten's office has so far demonstrated an admirable aversion to arm twisting:

"I think that the Government has started to call the shots a lot more in the past few weeks, than was originally the case. This is because Bill Shorten is a very good Minister and he is not letting the industry get away with what they would have in the past."

She expressed confidence that the changes proposed for the industry would be meaningful and far-reaching:

"The minister has asked consumer organisations for our views of what needs to change and then he tests this with the industry, at board level. It is pretty clear that there will be changes and I don't think they will be around the margins."

But away from the current debate, it seems clear the industry continues to maintain an impressive foothold inside the Federal Treasury and government. Insurers remain exempt from laws banning unfair contract terms and are exempt from crackdowns on financial commissions.

Two weeks' ago, Maurice Blackburn lawyer John Berrill criticised the ICA's continuing influence with lawmakers in The Australian Financial Review:

"The insurance council certainly seems to have the ear of government...I don't think there's any doubt they have been able to lessen any government intervention in the insurance sector. But I think there's more appetite [for intervention] now."

But Talbot, citing NRMA's donations to both sides of politics over the years, says the show will continue to roll on for awhile yet:

"They'll be pushing the line that nothing really needs to be done and that all the community outrage will soon blow over. Then they'll be looking forward to booking for a table of ten at the next party fundraiser."

Some of that influence can measured in cash. In 2009-10, according to Australian Electoral Commission data, IAG shelled out $10,000 to sponsor the federal Liberal party's Millenium Forum while arch rivals Suncorp stumped up $12,250 for the party's NSW branch. In previous years, IAG has donated heavily to both sides of politics.