The Insurance Council of Australia (ICA) has provided detailed feedback on the government’s proposed automated decision-making (ADM) regulatory framework.
In its submission to the Attorney General’s consultation paper, the ICA highlighted the importance of balancing consumer protections with the efficiencies ADM offers, noting its growing role in the insurance industry.
ADM technologies are increasingly used in insurance to improve operations, such as processing claims during natural disasters, detecting fraud, reducing operating costs, and managing premium adjustments.
The ICA stressed that while the consultation paper focuses on ADM use in government operations, many of the issues it raises – such as governance, data security, and transparency – are also relevant to the private sector.
The ICA drew attention to the similarities between the ADM framework and the proposed Artificial Intelligence (AI) Mandatory Guardrails, which also regulate emerging technologies. It argued that ADM and AI face similar risks and that regulatory approaches should remain consistent unless there are clear reasons to diverge.
One of the ICA’s key recommendations was that the government adopt a risk-based approach to ADM regulation. For example, smaller-scale administrative decisions should not be subject to burdensome oversight, as this could negate the efficiencies ADM is intended to provide.
The ICA also suggested leveraging principles from the AI Mandatory Guardrails to ensure consistency between frameworks.
The submission further pointed to recent changes to the Privacy Act 1988. Amendments introduced in December 2024 require businesses to notify consumers if ADM is used in a way that “significantly affects their rights or interests.”
The ICA raised concerns about the vague definition of “interests” and the potential for regulatory overlap. It urged the government to consider how the ADM framework will align with privacy laws and guidance being developed by the Office of the Australian Information Commissioner (OAIC).
In closing, the ICA emphasised the importance of coordinating ADM regulations with related legislative efforts to minimize duplication and inconsistencies. It also expressed a willingness to continue working with the government as the framework takes shape.
The ICA also provided feedback on the proposed Scams Prevention Framework Bill 2024 (SPF Bill), which aims to impose mandatory obligations on certain industries to identify, report, and prevent scams.
During a Senate Economics Legislation Committee inquiry, the ICA stressed the need for the bill to reflect the unique characteristics of the insurance industry and avoid unnecessary regulatory overlap.
While the insurance sector is not as heavily targeted by scams as the banking industry, insurers remain exposed to phishing attempts, fake websites, and fraudulent payment requests. The ICA noted that scams often intensify following natural disasters, as consumers facing urgent claims may become more vulnerable to fraud.
To address these challenges, the ICA launched a counter-fraud and scams unit in 2024. This initiative focuses on identifying organised fraud networks and monitoring emerging scam trends, helping the industry protect consumers and improve its response capabilities.