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Insurance industry must act to stamp out poor investigation practices

Financial Rights has today called on the general insurance industry to introduce a set of best practice standards for insurance investigations in its Code of Practice. This follows the release of the report titled Investigation of Claims and Outsourced Services by the insurance industry’s independent monitor – the General Insurance Code Governance Committee (CGC). The CGC Report found that:

  • when insurers outsource claims-related functions to Service Suppliers (such as investigators), compliance with the Code of Practice is more unpredictable and the degree of oversight they exercise varies considerably;
  • oversight of outsourced investigator conduct may be inadequate, particularly in relation to claims handling, and
  • there is not enough guidance provided to external Investigators when interviewing consumers including minors.

“The general insurance industry needs to act immediately to address the huge number of concerns consumers have with the way investigations are conducted by insurers,” said Alexandra Kelly, Financial Rights Principal Solicitor. “We regularly hear from consumers subject to an insurance investigation who are threatened, bullied and harassed by insurance investigators. Consumers are subject to incredibly long interviews – sometimes over five hours in length –routinely describe being treated like criminals, and many with poor English skills have not had access to appropriate translators.”

“Enough is enough. The general insurance industry needs to introduce a comprehensive set of best practice standards for insurance investigations in the Code of Practice in order to restore trust and confidence in the insurance industry.”

The CGC Inquiry and subsequent Report followed the release of the Financial Right’s Legal Centre Report Guilty Until Proven Innocent: Insurance Investigations in Australia, in March 2016. Guilty Until Proven Innocent found a litany of consumer concerns and minimal oversight.

“At the time we released Guilty Until Proven Innocent detailing a vast range of poor investigation behaviour, the response from the industry was muted. The industry’s peak body – the Insurance Council of Australia – was particularly dismissive stating that the “40 anecdotes described in the report are not evidence of a systemic problem with insurance investigations.” We believe strongly that the CGC Report released today proves this view wrong and is a vindication of the work that we undertook to raise this issue.

“The ICA and the general insurance sector now need to step up, acknowledge the concerns of consumers and act to change the way investigations are conducted.”

The CGC Report can be found here at http://www.fos.org.au/custom/files/docs/gicgc-omi-on-investigation-of-claims-outsourced-services-may-2017.pdf

Guilty Until Proven Innocent: Insurance Investigations in Australia can be read here: http://financialrights.org.au/wp-content/uploads/2016/03/Guilty-until-proven-innocent.pdf

Contact

For further information contact Drew MacRae, Policy and Advocacy Officer, Financial Rights Legal Centre on 02 8204 1386

About Financial Rights

The Financial Rights Legal Centre is a community legal centre that specialises in helping consumer’s understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. We provide free and independent financial counselling, legal advice and representation to individuals about a broad range of financial issues. We operate the Insurance Law Service which provides advice nationally to consumers about insurance claims and debts to insurance companies. Financial Rights also operates the Credit & Debt Hotline, which helps NSW consumers experiencing financial difficulties. Financial Rights took over 26,000 calls for advice or assistance during the 2015/2016 financial year.

Insurance Law Service 1300 663 464

Credit & Debt Hotline 1800 007 007

Aboriginal Advice Service 1800 808 488