Australian regulator nudges insurers to improve claims handling

After concluding a review, five key shortcomings were identified.

Australian Securities and Investments Commission (ASIC)  urges general insurers to enhance claims handling after a review exposed shortcomings in five key aspects. 

ASIC's Report 768 Navigating the storm: ASIC's review of home insurance claims (REP 768) assessed home insurance claims practices, coinciding with new obligations starting in January 2022. 

The study scrutinised data from over 218,000 claims made between January and March 2022 by six insurers, covering 63% of Australia's home insurance market.

These insurers are AAI, Allianz Australia Insurance, Auto & General Insurance, Insurance Australia Group, QBE Insurance, and Youi.

The review encompassed all home insurance claims lodged within the specified period, followed through a 6-month claim handling cycle. Notably, 43% of the examined claims were related to severe weather events, like the 2022 floods in New South Wales and Queensland (CAT221).

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REP 768 pinpointed five areas needing improvement:

• Enhanced communication with consumers regarding decisions, delays, and complexities.
• Improved project management and oversight of third parties.
• Better handling of dissatisfaction and complaints.
• Enhanced identification and treatment of vulnerable consumers.
• Increased resources for claims handling and dispute resolution functions.

ASIC also calls on insurers to analyse claims handling resources and promptly address complaints handling under-resourcing. Individual improvement areas will be communicated to the six insurers. 

ASIC said it will maintain oversight and take regulatory measures if needed.