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Parliamentary Joint Committee on Corporations and Financial Services
Options for greater involvement by private sector life insurers in worker rehabilitation

AZMI, Ms Susan, Director, Medical Benefits Division, Department of Health

BECKETT, Mr Ian, Principal Adviser, Retirement Income Policy Division, Treasury

BROWN, Ms Diane, Division Head, Treasury

KOHLHAGEN, Mr Peter, Senior Manager, Policy Development, Australian Prudential Regulation Authority

SHAKESPEARE, Ms Penny, Acting Deputy Secretary, Department of Health

SUMMERHAYES, Mr Geoff, APRA Member, Australian Prudential Regulation Authority

WEISS, Mr David, First Assistant Secretary, Medical Benefits Division, Department of Health


Evidence from Mr Kohlhagen and Mr Summerhayes was taken via teleconference—

CHAIR: Welcome. I remind committee members and witnesses that, while this is a public hearing, care should be taken to protect the privacy of individuals and that arguments should be made without naming individuals. We appreciate that it is getting late at night. We will get into your opening statements. The shorter you make them, the quicker we can get into the questions. Mr Summerhayes, I invite you to start with an opening statement.

Mr Summerhayes : We don't have an opening statement. I'm sure you'll be pleased to hear that!

CHAIR: I'm disappointed, actually. I wanted to hear from you! We'll go over to the Department of Health then.

Ms Shakespeare : There is no opening statement from the Department of Health either.

CHAIR: The Department of the Treasury?

Ms Brown : We'll join the club: no opening statement. We are happy to take questions.

CHAIR: Thank you. We might open with Mr Falinski because he's had very few questions tonight.

Mr FALINSKI: I think that's been deliberate too!

Thank you very much for coming. What do you think of the FSC's proposal?

Ms Shakespeare : Perhaps I could plead some ignorance as to the detail of the FSC's proposal. I did hear the last witnesses, and it seems to involve potentially better coordination of healthcare services for people insured under their policies, but I also heard reference to payments for in-hospital surgical services. That's not currently consistent with the legislative framework that we have for Medicare. Medicare was established as a system of universal access to healthcare under section 126 of the Health Insurance Act 1973. It's not possible for general insurers to cover services that are delivered under Medicare. There are some exemptions in the legislation at the moment for workers compensation systems run by the states and territories, which tend to be no-fault schemes. We also have private health insurance for in-hospital services, but that is community rated, not risk rated, and so is to some extent consistent with the legislative arrangements for Medicare in terms of ensuring that there is equitable access to health services. Premiums that are charged to people who have private health insurance must all be the same whether they are of a particular age, health background or greater likelihood to claim on their insurance. So we do regulate to make sure that people are not denied access to health care through private health insurance which complements Medicare.

CHAIR: Treasury, any comments?

Ms Brown : We have read the submission from the FSC and a number of other submissions made to the committee. I'd say that there's probably a range of factors to be considered, but, like Ms Shakespeare, we have looked at it more from what the regulatory arrangements that apply at the moment are. Our focus is from the financial system. Life insurance companies currently are prohibited from offering any business other than a life insurance business, so there would need to be regulatory form if government were to decide to continue to adopt any such proposal.

CHAIR: APRA, do you have an opinion?

Mr Summerhayes : Yes. The committee will be aware that we did make a submission to the committee dated 9 May. We are obviously aware of the FSC's proposal. We think the proposal has some merit, although we acknowledge that, with the way the various acts and pieces of legislation operate, they would prevent the provision of a life insurer providing rehabilitation to somebody who was within the hospital system. What APRA sought to do with its submission was to outline that we do think there is merit in early intervention with rehabilitation of insured policyholders and that, from APRA's point of view, we do not have any prudential concerns if the government were of a mind to change the legislation, although we are cautious about the intricacies of how the various pieces of legislation operate, and it would need to be carefully considered so that there weren't any unintended consequences beyond what I think is being proposed here: that if a policyholder is injured and is entitled to benefit from an insurer then it is in the policyholder's interests and, as acknowledged by the FSC, the insurer's interests to provide that benefit and, indeed, rehabilitation as soon as is it is appropriately and practically possible.

Mr FALINSKI: Can I take it as a truth universally acknowledged that early intervention is best for rehabilitation of an injured person?

Ms Shakespeare : From the Department of Health's prospective, yes.

Mr FALINSKI: At the moment, according to other people who have sat where you sit, that's not occurring at the moment, because we have legislation—put in place for good reason in the past—that prohibits life insurers from intervening to supply early intervention for injured people.

Ms Shakespeare : I'm not familiar with the evidence to support that there are delays in access to rehabilitation. We certainly have a system that supports access to a range of medical professionals for services. I don't think that the current prohibitions under the Health Insurance Act would prevent a life insurer or general insurer from better coordination of care, but it's the funding of the actual episodes of care: covering the doctors' costs and consulting with the patient. But actually helping the person who is insured to organise those services and to find a GP who can refer the person to an appropriate specialist, I think, would be quite a useful thing.

Mr FALINSKI: That's an important point. One of the earlier witnesses—I think it was from Maurice Blackburn; I'm sorry if I'm wrong—when asked what is happening at the moment, said that, without the funding, these services maybe provided but at a later stage of the treatment. Would that be right?

Ms Shakespeare : I didn't hear the witness. I don't know exactly what sort of services they are talking about. With coordination of care, there are some parts of Medicare that cover particular types of care coordination plans through GPs and things, but I think joining a person up with health care would be something that insurers could do.

Mr FALINSKI: Would you mind taking that question on notice, because I think it is a threshold question, really, isn't it?

Ms Shakespeare : I suppose we would need to understand exactly what they're proposing to fund and whether that actually requires any amendments to the Health Insurance Act.

Mr FALINSKI: I think the threshold question is are there forms of treatment that are currently not being provided to injured people because of the fact that we currently prohibit life insurers from stepping in and providing that or funding that care or treatment.

Ms Shakespeare : The Health Insurance Act only prevents general insurers from covering treatment that is covered under Medicare. So our position would be that if it is covered under Medicare, it is available to the Australian community. If it is not available under Medicare, then there is no prohibition on it being provided.

Mr FALINSKI: Then why are life insurers saying that there is?

Senator O'NEILL: Because there's a gap in service provision because Medicare isn't adequately covering the need.

Mr FALINSKI: Is that correct?

Ms Shakespeare : I'm not sure what the claims of the life insurers are here, sorry.

Senator O'NEILL: No, but that was a claim that I just made.

CHAIR: Well, we could argue that claim, couldn't we?

Mr FALINSKI: Would you mean taking that on notice?

Senator O'NEILL: But there is a gap. This is what's happening. People need services; they can't get them. Everybody's describing this reality. This is one solution to that problem that's being offered. Another one that was proffered earlier by the ACTU is that the government should provide access to Medicare that means that that gap reduces. They are alternative models for the same problem.

Ms Shakespeare : The government is investing an additional $4.8 billion in the Medicare over the next four years.

Senator O'NEILL: But the gap remains, Ms Shakespeare.

Ms Shakespeare : I've seen no particular evidence about claims in gaps here. There is significant continuing increasing investment in Medicare.

Senator O'NEILL: So why are we hearing from a sector that wants to fill in the gap? The sector has described a problem that no-one has disputed here—there's a gap.

CHAIR: We're not talking about Medicare; we're talking about insurance claims.

Mr VAN MANEN: The gap is in private medical treatment outside of Medicare. So, if people want to get private health insurance, there's a gap. Obviously there's a cost above your private health insurance, sometimes with your doctors or treating physicians for specialists. There are waiting lists at hospitals that people have to wait on, and that could then become problematic are for the rehabilitation of their injuries. I'd like to go back a step. Do you know what the original policy rationale was for excluding life insurance companies from providing those payments, given that, if somebody's covered by a workers compensation claim, the worker's compensation system can make those payments?

Ms Shakespeare : The original exclusion, as far as I'm aware, was because Medicare was designed as a system of universal access for Australians. So this would be how people accessed—

Mr VAN MANEN: You could say the same thing about workers compensation then. Why is workers compensation paying payments for medical treatment when, supposedly, Medicare is there to cover all of that?

Ms Shakespeare : So we don't prevent people from accessing Medicare if they have a compensable claim against their employer under workers compensation. We have a system which recovers Medicare benefits from the workers compensation insurer scheme once the claim has been accepted. But there is specific provision that means that the general prohibition on general insurers covering services covered by Medicare does not apply to workers compensation systems.

Mr FALINSKI: Basically the proposition being put to us by the insurers is that at the moment someone gets injured and they can't do anything about helping them become well again until there's a claim, which maybe down the track. This is for everything from mental health issues to a bad back, and they want to be able to step in at an earlier point and provide treatment for that. Given what you said earlier, there is no dispute that the earlier you can treat an injury, the sooner or the better it is for the person who has been injured. So, what are they talking about, if all of this is already covered anyway?

Ms Shakespeare : I know that certainly early intervention is a key part of state and territory workers compensation schemes. How they have implemented that—certainly in the ACT scheme, which I'm more familiar with—is that even if a final decision about accepting a claim hasn't been made, they will still support the insured person to get access to health services.

CHAIR: So we allow early intervention from state and government insurers. Is that what you're saying?

Ms Shakespeare : That's a feature of workers compensation systems, yes.

Mr FALINSKI: It would be good to get some clarity on this issue, but the other thing I was wondering was: has there been any study undertaken on being injured at work or injured generally and delay in treatment and the total cost to Medicare and our health system in general from those delays?

Ms Shakespeare : The Department of Health, as far as I'm aware, has not done such a study. I know that the states and territories have comparative performance monitoring systems for workers compensation schemes. They probably have data going back to before and after they changed their arrangements to focus on early intervention, which might indicate whether that has been successful. Again, that would be something I think you'd need talk to the states and territories about.

Mr FALINSKI: Is Treasury aware of any?

Ms Brown : I am not aware of any study.

Mr FALINSKI: There has been a lot of talk tonight, in shorthand terms, about a power imbalance. When someone is injured they are very vulnerable, in particular if they have presented with mental health issues. This puts them in a vulnerable position where you may have a group of doctors suggesting a course of treatment and an insurer willing to pay for treatment to help them recover quickly, but they may feel pressured into doing something that they don't particularly want to do. Are there models, either here or overseas, that can be implemented or can be part of a legislative framework that would protect a patient from that sort of pressure—from feeling as though they are being pressured into doing something that they otherwise wouldn't wish to do?

Ms Shakespeare : Informed consent is really a feature of the Australian healthcare system. That is consent between a patient and their treating health professional, a doctor usually. Because we have quite structured health-funding arrangements—both private health insurance and Medicare—there isn't the pressure on patients to receive treatment because of cost. It's based around what the treating health professional thinks is the best course of action for the patient.

Mr FALINSKI: Are you suggesting that if we structured our funding model differently, so it's less structured or structured differently, that that pressure might creep into the system? Or would your earlier part of the statement still hold?

Ms Shakespeare : It really depends the design, if you were to introduce new payers into the Australian health system. It's an issue we regularly discuss with the medical professionals around private health insurance and their concerns about not introducing managed care into the Australian health system, where it's the payer deciding on the treatment course that is provided to a patient. So, I think it would need careful consideration.

Mr FALINSKI: What I'm hearing is that that careful consideration is already taking place. So it wouldn't necessarily be a major step outside of what we do currently? I don't mean to be leading you—I'm just asking that question.

Ms Shakespeare : It's a major feature of the design of our private health insurance system.

Mr FALINSKI: At the moment. Okay, thank you for your time.

Senator O'NEILL: This question is to the health department: have you read any of the submissions that have been provided to this inquiry?

Ms Shakespeare : I have read APRA's submission.

Senator O'NEILL: Mr Weiss?

Mr Weiss : I've read APRA's submission, the private health association's and a couple of others—from Allianz and the college of physicians.

Senator O'NEILL: Have you read the FSC proposal?

Mr Weiss : No.

Senator O'NEILL: Ms Azmi?

Ms Azmi : I'm the same as Mr Weiss.

Senator O'NEILL: Ms Brown and Mr Beckett?

Ms Brown : I've read summaries of the submissions that were prepared by staff.

Mr Beckett : I've read the submissions.

Senator O'NEILL: And you indicated that you had read the FSC submission earlier in your evidence. Mr Summerhayes?

Mr Summerhayes : Yes, we have reviewed it. As per our letter to the committee, we have noted the content of the FSC submission.

Senator O'NEILL: It concerns me somewhat that the FSC submission hasn't featured in the Department of Health's consideration, because what's proposed is a very significant change to the way that funding is being considered for people who are vulnerable and clearly in need of health care. I would encourage you, after this evening, to have a look at that submission. If you could provide your response to it, that would be helpful.

I go to any advice that has been given to government with regard to the establishment of terms of reference. Did the health department suggest that this inquiry provide any advice to the government about undertaking this referral?

Ms Shakespeare : Not from the Department of Health. We've only been invited to attend quite recently.

Senator O'NEILL: From Treasury?

Ms Brown : Treasury did provide advice to the minister when establishing the terms of reference.

Senator O'NEILL: Is this a concern for Treasury, this issue of private sector life insurance involvement with workers' rehabilitation? Is it high on your priority list?

Ms Brown : It's something that we're interested in. We've had talks with stakeholders over a period of time about this, but we're currently focusing on other issues.

Senator O'NEILL: One of the key stakeholders is the Financial Services Council. Did you have meetings with the Financial Services Council about this issue?

Ms Brown : I would have to take that on notice. My staff may have, which is why I'm hesitating. It might have been sometime last year and in a more general context. Mr Beckett might know.

Mr FALINSKI: Can I expand that question to any of the people who've made submissions?

Senator O'NEILL: Of the people that we've received submissions from and had consultations with this evening, who has Treasury consulted with, and when did you undertake that? Could you take that on notice?

Ms Brown : 'We haven't generally consulted on this issue' would be an accurate description. We've talked with stakeholders. FSC is clearly an important stakeholder in the financial sector.

Senator O'NEILL: So, you did discuss this matter with them?

Ms Brown : I will have to check that. It may have arisen during conversations in and around other matters that we were consulting with them on. Similarly, that may have occurred with other stakeholders that made submissions, but I'm fairly confident that we wouldn't have talked to some stakeholders, because they're not in our usual group of stakeholders concerning the financial system.

Senator O'NEILL: Mr Beckett?

Mr Beckett : My recollection was that last year the FSC wrote to us with this proposal, so, at a pretty high level—the idea that there were certain restrictions in current legislation that might prevent some of their members from offering different types of policies. They mentioned superannuation and general life, and I think they also mentioned some health legislation and private health insurance. We had a look at the issue and decided that there are some, as people have acknowledged. There may be some potential benefits from early intervention, in that there are restrictions now that prevent things from happening that may be in the interests of some policyholders. We also recognise that the devil's probably in the detail in terms of how it actually works. That is something that has become more apparent in the submissions, in that there was an idea of 'you should get rid of these laws'. Well, what would happen? How would it actually work?

You see some submissions that have gone into a little bit more detail on how this might work. From the government's perspective, it was really a case of: 'Well, this is an interesting issue. We can see that it's a complex issue. We can see that there may be some gains.' I think the government made a decision to refer the matter to this committee to see if it could dig up some submissions and shed some light on more-detailed proposals from the industry in terms of how it might work and how the regulation might work, given that it's pretty complex, across life, super and health. From what the FSC were suggesting earlier, it seems to be quite detailed product-based regulation, which is a bit unusual. We were approaching this topic with an open mind, seeing it as an opportunity to learn a little bit more from the inquiry about how it might work and what different people think about the proposal.

Senator O'NEILL: Thank you for your answer, Mr Beckett. As I understand it, the FSC, whose members stand to benefit from a change in legislation, advanced this with the government sometime last year, and now this committee's on a fishing expedition to find out if it could possibly work.

CHAIR: I think they'd have to answer that question!

Senator O'NEILL: APRA, thank you for your submission. I take you to the last section of your submission—it is marked as page 149 in mine, but it's the second-last page of your submission. You talk about, 'Encouraging life insurers to continue to develop their ability to provide early and targeted rehabilitation.' Then you talk about, 'Life insurers could be supported in this regard through appropriately designed legislative changes to remove some of the impediments,' impediment which have been described by Treasury and the Department of Health based on former legislation.

This question is for all of you. The current impediments that exist—that are described as impediments—are because there was a regime established to protect consumers and provide safeguards. Could you give me an understanding of why the separations of opportunities to respond to this market that have been in place since—what was the year you quoted, Ms Shakespeare? 1993?

Ms Shakespeare : The Health Insurance Act dates from 1973, but I think that these arrangements have been in place since 1983.

Senator O'NEILL: We've had this in place for a very long period of time. What is your view about why significant legislative change that would need to have incredibly high levels of regulatory containment, as we've discerned this evening, would be something that should be advanced in the Australian context? Ms Shakespeare, do you have a view about that?

Ms Shakespeare : I think that, if we have general insurers who are interested in facilitating early intervention for the insured people, there would be ways of doing that that do not require change to the existing legislative framework. Facilitating access to medical care and to allied health services that are not covered under Medicare would be things that could be done which would benefit the patients.

Senator O'NEILL: I'll come back to you with a question about the private health insurance evidence this evening. Ms Brown and Mr Beckett, do you have a comment.

Mr Beckett : We have, as you would be aware from your previous review, life insurance provided through superannuation, often as part of group policies, so we have restrictions. In some cases we require it. We have, basically, restrictions on the type of insurance that can be provided through superannuation. To some extent, that reflects the objective of superannuation. We basically limit insurance to death, which, I guess, is one of the core purposes of superannuation, providing a death benefit. We have TPD, which is almost making someone whole if they become totally and permanently disabled before they reach retirement. We have income protection, which is a short-term disability policy which is probably a bit more of a tenuous link to super, and we don't allow any others. In some way that reflects the purpose of super, and TPDs generally are paid as a lump sum—you make a decision that someone's TPD, then you pay it. The issue in terms of providing rehabilitation is that it's hard to say, 'Your TPD—here's a lump' sum versus 'You might be TPD if we don't do something, so can I give you a lump sum TPD payment if you turn out not to be TPD?' It's a bit of a chicken-and-egg thing, and also the rules on income protection say that the insurer has to pay a financial benefit for salary continuance.

Mr VAN MANEN: Personally, that's somewhere between 75 per cent and 80 per cent of salary, so it's not—

Mr Beckett : Generally 75 per cent for two years.

Mr VAN MANEN: And in super, it's generally got a two-year benefit payment period; whereas. outside of super, you can go to age 65 and get up to 80 per cent. So there are significant differences between income protection in super and outside.

Mr Beckett : That's true. In some ways, we have these rules. One issue is: should you be able to provide these benefits through life insurance? And then the second question is: can you do it through superannuation where, we have sort of forced people to put in SG contributions primarily for retirement income purposes? How much insurance should we hang off that; and, if we have TPD, is there a better way of doing it? I guess that's the debate.

Senator O'NEILL: Can I ask APRA for a comment.

Mr Summerhayes : Going back to the start of your question, you were asking: why did this come about? The issues have been known for some time about the inability to provide a benefit in certain circumstances, as has been highlighted. This has probably got more focus in recent times, because of the challenges that this particular product has had. So, as we point out in our submission, this particular benefit, which is a useful benefit to consumers, to policyholders, has been a very significant loss-making product for the sector over about the last five years. That's due, as we point out in our submission, to unsustainable pricing; perhaps weaknesses in benefit design; poor claims management practices; overly complex terms and conditions; competitive pressures; and access to data and analytics. So, there has been a focus from APRA, who has put a lot of pressure on insurers to return this offer to more sustainable pricing and benefit design so it is prudentially sound in the long term. That has forced insurers to think about: what ways can the competitive nature of the product be maintained and for the product to be profitable going forward? Early intervention is one such dimension of that. To answer somebody's question about why this hasn't come up earlier, given the legislative settings have been there for some time: it hasn't been until the last five to seven years that there has been a sustainable pricing issue with the product. Insurers are now repricing this product up, so that it is profitable, and that's putting it out of the reach, in some cases, of consumers. It's in everybody's interests to make sure that, from APRA's view, the benefit is able to be offered in an accessible way for policyholders.

Senator O'NEILL: Can I take you to your evidence around concerns about the involvement of insurance providers on consumers' advantage and disadvantage. You say:

… any changes should ensure consumers are not disadvantaged and that any potential conflicts of interest, particularly for life insurers, are addressed.

I'm not sure you if heard much of the evidence this evening, but one of the key features of many of the participants has been concerns about conflicts of interest and an imbalance of power. Do you have anything to add to your remarks there, Mr Summerhayes?

Mr Summerhayes : As has been pointed out, there are a number of pieces of legislation, and the government would need to be concerned that there are no unintended consequences. I also heard the comments earlier about the reputation of the sector, which has suffered a fair setback in recent times, in some cases for good reasons. But I also believe that the sector appears to be making some constructive suggestions on how the sector, and the offers that it puts forward, could be improved, and I think that is the spirit in which this has come forward. But you wouldn't want a circumstance where insurers were pressuring consumers, in inappropriate circumstances, to go into rehabilitation if that wasn't consistent with the rest of their whole medical care. I'm no expert on rehabilitation or medical care, but, given that APRA oversees the private health insurance sector as well, I think we'd want to make sure that the benefits and the care of the policyholder were treated in a holistic way.

To underscore all of this, the policyholder has paid premiums to the insurer over a long period of time in these cases and the policyholder is entitled to get a benefit from that premium. I think the proposal is that the current legislative arrangements are prohibitive, when the policyholder is in hospital, of getting that particular benefit from a life insurer, notwithstanding that they might be receiving other forms of benefits from other forms of insurance.

Senator O'NEILL: Could I ask you to flesh out your concerns about potential issues for the private health insurance industry—restrictions on covering certain treatment options and the potential flow-on of costly claims for PHIs and, ultimately, higher premiums.

Mr Summerhayes : In the same way that this seems at the moment to prevent, in some circumstances, life insurers offering a benefit to their policyholders while they're under the auspices of the private health system, you wouldn't want a circumstance where this would somehow open the door for life insurers to offer forms of hospital care or coverage that is the domain of private health insurers. Certainly, APRA would be concerned about that because it goes to skill sets, pricing, the sustainability of benefit design et cetera. This is a delicate situation here, but, as we said in our submission and we don't shy away from, we think there is some merit in the proposal.

Senator O'NEILL: Can I go to each of you for a comment. I was very interested in the timing of the announcement of this inquiry because it was at the same time as this committee released its report, which, I think it's accurate to say, was a fairly damning indictment of some of the practices of the insurance industry in Australia and had a very significant and unanimously agreed set of recommendations around significant change that needs to be undertaken in regulation, observation and management of the sector. My question to you is: given the report, does this seem to be the appropriate time to be investigating a greater role for an insurance industry that is already suffering a trust deficit?

CHAIR: Just to clarify—the announcement of the inquiry was about two months after the report had been tabled. It wasn't the same day.

Senator O'NEILL: Sorry, I meant the same time. I'm a bit sleepy.

Ms Shakespeare : The part of the industry that we deal with is private health insurers. We have a very well-regulated part of the insurance industry. We're going through a major reform process with them. That's probably all I can say to comment in response to your question.

Senator O'NEILL: Have they indicated any concerns to you about the potential for life insurers to come in and disrupt their business model and increase premiums that are already far too high for too many Australians?

Ms Shakespeare : I know that the private health insurers would be concerned, but that's because, if we're looking at trying to cover the same sorts of services with an insurance industry which is community rated, compared to others which are not, which are risk rated, you would have very different outcomes in terms of coverage, benefits and costs of premiums. It's very difficult, I suppose, to imagine the two operating in the same space.

Senator O'NEILL: What would the outcomes be for ordinary Australians because of the type of competition, potentially, that would be set up in such a structure?

Ms Shakespeare : I think that, as Mr Summerhayes commented before, it would be very difficult for the hospital cover, which is where the community-rated private health insurance operates at the moment, to be covered by risk-rated insurers. There are potentially other areas which are not covered by the Private Health Insurance Act, which are not prevented by the existing regulatory framework under the Health Insurance Act, which general insurers could valuably enter into if they wanted to promote early return to work or early intervention for the people that they're insuring. I think that, if that's what they would like to do, that's an admirable thing that should be encouraged, but we need to be careful about the existing regulatory frameworks, which have been put in place for a long period of time and for good reasons—to make sure that we have equitable access to health care. But I think that there would certainly be areas where they could try to support better health care for the people that are insured under their policies through facilitating early access to health care, early intervention.

Senator O'NEILL: Ms Brown?

Mr VAN MANEN: I have a question just off the back of this.

Senator O'NEILL: Could I just get a comment from Ms Brown on this one and then go to you.

Ms Brown : I'm not aware of any thinking around the timing of the reference to this committee of this inquiry, but both the industry and the government are doing work to try to address some of the instances of poor practice that have occurred in the life insurance industry. The industry is developing a code of practice, and similarly the government has announced that it's looking at extending the unfair-contract-term provisions to insurance, which is currently an exemption, an exempted industry. I'm not aware of any thinking, but there is work going on to address instances of poor conduct.

Senator O'NEILL: Mr Summerhayes, have you got any comments about the timing?

Mr Summerhayes : No, I don't, but I would make the point that APRA is obviously very aware of the committee's very good work that has been done over now an extended period of time—the 200-page report and the 49 recommendations that have been put out—and I would say openly and transparently that we have encouraged industry and the FSC to engage with the committee's work over that period as proactively as they can. That is not only to answer the questions of the committee but to put forward proactive solutions where they think they are warranted. I have assumed that this particular proposal came forward in that context. As to timings, the release of the report and other things, I don't have any knowledge of any intricacies there.

Senator O'NEILL: I just want to echo Mr Van Manen's final comments, when we had the FSC here, about concerns about the slow advance of work. We are happy to hear this evening that the conversations between the Royal Australian College of GPs and the FSC are advancing, but practically, on the ground, we have not seen the implementation of these recommendations—not one of them, let alone 49 of them—to the best of my knowledge. So I just think there's general concern about giving more responsibility to a sector that's already not responding to that important report in a practical way yet.

Mr VAN MANEN: I just want to ask a question on definition, Ms Shakespeare. Private health insurance, as you say, is community rated, so premiums are set across the board; there are no questions about a person's health or health conditions or any of that sort of stuff. But couldn't you then equally say that a group life policy, where none of those questions are asked either—it's just part of a group life policy through super—is the equivalent of a community rating for private health insurance? And, if that's the case, then is there not an argument, possibly, in favour of allowing insurance companies that provide group life cover, where they have claims through their group life policies, to provide those services?

Ms Shakespeare : Community rating is just one part of the regulatory framework around private health insurance. There are mandatory services that need to be covered by policies. There is control over premium increases. There is a premium round that's approved by the health minister each year. So it is actually quite an expensive set of regulations that come with being a complying private health insurance product under the Private Health Insurance Act. So I think that, if you were looking at comparing the two, you'd probably need to look at the whole regulatory framework.

Mr VAN MANEN: Thank you.

CHAIR: We're right on time. We're going to wrap it up now, which is fantastic. Thank you for coming along tonight. Thank you to the three groups of witnesses. Thank you for your submissions. Any answers to questions taken on notice should be provided by 11 July 2018 to the secretariat. That concludes today's proceedings. Again I thank all the witnesses, and I also thank Hansard, Broadcasting and the secretariat.

Committee adjourned at 21:00