Governments should work with the general insurance sector to enable the pre-filling of Australians’ driving records and insurance claims history information required for disclosure purposes at the time of purchase of motor vehicle insurance.
This was the key recommendation of the Financial Rights Legal Centre report Automating General Insurance Disclosure which examined close to 400 cases of Australians being denied their insurance claims for not fully disclosing their driving, insurance claims records or other relevant information.
The report found that four insurers accounted for 80% of the non-disclosure AFCA disputes in 2020: Auto & General (26%), AAI (Suncorp Group) (22%), Hollard (17.9%) and Allianz (13.4%).
Auto & General’s brand Budget Direct was the most common brand named by Financial Rights clients denied claims on non-disclosure grounds over the three year period (28%).
“There are an untold number of Australian drivers who, for all intents and purposes, are driving on our roads believing that they insured - when in reality they are not,” said Financial Rights Chief Executive Karen Cox. “This is because they either inadvertently (or in a minority of cases) purposefully did not provide the full picture of their driving history, insurance claims history, or other information relevant to their insurer at the time they purchased their insurance. This is not a safe state of affairs for them or the other drivers on the roads.”
“We are already able to enter our registration numbers and pre-fill our vehicle details when we obtain a quote for insurance - we should be able to do the same with our driving records and insurance claims histories. This is our own data held in databases by roads and traffic authorities and insurers – we should be able to use it to pre-fill our insurance disclosure to make sure we get the right insurance coverage.”
Financial Rights engaged NielsenIQ to test consumer comfort with sharing their driving record and insurance claims histories automatically with insurers at time of quoting. NielsenIQ found that 71% of Australians are comfortable with sharing their driving history with insurers and 73% are comfortable sharing their insurance claims histories.
“UK drivers can do this under its MyLicence scheme – Australians drivers should be able to as well. As for insurance claims histories – this is information about you that insurers already hold. All insurers should enable claims histories to be pre-filled by drivers for free. This is one of the key potential use cases that can benefit Australians by applying the Consumer Data Right to general insurance.”
“In the meantime, we recommend that Auto & General (and in particular Budget Direct), AAI, Hollard and Allianz examine their quoting, sales and claims assessment processes to lower the incidence of claims denials due to non-disclosure and ensure Australians obtain appropriate insurance coverage based on accurate information.”
“While getting a good price for insurance is important, it is even more important that people are actually covered. When people are shopping around for insurance they should not equate fewer or vaguer questions about driving and claims history with a more relaxed attitude to risk – the sting might be in the tail when you get rejected at claims time. Always tell the insurer everything you think may be relevant and shop around until you get proper cover.”
The full report can be obtained on the Financial Rights publications page: https://financialrights.org.au/publication/
Automating General Insurance Disclosure is the second report in the Future of Insurance series.
The first report Open Insurance and Consumer Data examined the potential consumer benefits and risks associated with an improved ability to access specified data held about them by insurers, and to authorise the secure disclosure of that data to third parties.
Automating General Insurance Disclosure was produced with grant assistance from Ecstra to examine - from a consumer’s perspective - the future of insurance and the new concept of Open Insurance - the application of the Consumer Data Right to the insurance industry. The CDR will provide insurance consumers with the ability to efficiently and conveniently access specified data held about them by data holder insurers, and to authorise the secure disclosure of that data to third parties (accredited data recipients) or to themselves.
For further information contact Drew MacRae firstname.lastname@example.org or 0404 604 978