CommInsure premiums face RC scrutiny

CFS executive general manager Linda Elkins was grilled by counsel assisting Michael Hodge over the business’ continued use of CommInsure products after management was made aware of their uncompetitive premiums by a Rice Warner report.

“What I want to suggest to you is looked at on the whole, when CommInsure does worse than the median, it does much worse than the median, and when CommInsure does better than the median, it does only a little bit better than the median,” Mr Hodge said.

“Do you think there are any conclusions that the commission can draw, based on that report, as to the adequacy of the supposedly arm’s length negotiations between Colonial First State and CommInsure?”

Ms Elkins rejected the suggestion, adding that the board of CFS had discussed the possibility of choosing a new insurance provider “on-and-off on different occasions”.

“I think the – the role of the product manager is to do the benchmarking, do the annual reviews. That’s overseen by the office of the trustee as well. Then to come to a conclusion as to whether we’re better off,” she said.

“The position becomes: are we better off to negotiate with the incumbent insurer where we see these weaknesses or better off to change the insurer. On balance, the decision that has been made is negotiation with the incumbent insurer, but this benchmarking would inform that negotiation.”