The Australian Competition and Consumer Commission will be making further inquiries of insurance companies about increased premiums for insurance policies related to the introduction of the New Tax System changes, ACCC Chairman, Professor Allan Fels, said today.
The ACCC is determined that insurance companies not take advantage of the tax changes due to come into effect on 1 July 2000 to increase margins.
The Treasurer has requested a review of recent premium increases and the ACCC will report back shortly.
Premiums set before 1 July 2000 should only factor in a Goods and Services Tax liability relating to after 1 July 2000. The ACCC will ensure that any price increases relating to the introduction of the New Tax System reflect not only the GST but also reduced input costs delivered by the change. It has strong powers under the Trade Practices Act 1974, including penalties of up to $10 million per offence for corporations for price profiteering under the changes.
The ACCC has already had discussions with the insurance companies and the Insurance Council of Australia about the likely impact of the New Tax System changes on premiums and will be seeking detailed substantiation of premium increases where these have been claimed to be due to the GST.
It can also issue a notice against a company that it considers to be engaging in price exploitation. A notice is prima facie evidence of price exploitation. Once the notice is issued it is up to the company concerned to show the price change is not unreasonably high having regard to the New Tax System changes. If necessary a notice can also be issued determining maximum prices. In addition the ACCC can recommend that companies be declared under the Prices Surveillance Act 1983. Declaration would require that companies notify the ACCC in advance of increasing premiums.
The ACCC has received numerous inquiries from consumers about the increased premiums on its hotline (1300 302 502) and has been following these up with companies.
Companies should only charge the new tax for the period of the contract that is current from 1 July 2000.
The ACCC is determined that insurance companies not take advantage of the tax changes due to come into effect on 1 July 2000 to increase margins.
The Treasurer has requested a review of recent premium increases and the ACCC will report back shortly.
Premiums set before 1 July 2000 should only factor in a Goods and Services Tax liability relating to after 1 July 2000. The ACCC will ensure that any price increases relating to the introduction of the New Tax System reflect not only the GST but also reduced input costs delivered by the change. It has strong powers under the Trade Practices Act 1974, including penalties of up to $10 million per offence for corporations for price profiteering under the changes.
The ACCC has already had discussions with the insurance companies and the Insurance Council of Australia about the likely impact of the New Tax System changes on premiums and will be seeking detailed substantiation of premium increases where these have been claimed to be due to the GST.
It can also issue a notice against a company that it considers to be engaging in price exploitation. A notice is prima facie evidence of price exploitation. Once the notice is issued it is up to the company concerned to show the price change is not unreasonably high having regard to the New Tax System changes. If necessary a notice can also be issued determining maximum prices. In addition the ACCC can recommend that companies be declared under the Prices Surveillance Act 1983. Declaration would require that companies notify the ACCC in advance of increasing premiums.
The ACCC has received numerous inquiries from consumers about the increased premiums on its hotline (1300 302 502) and has been following these up with companies.
Companies should only charge the new tax for the period of the contract that is current from 1 July 2000.