The Financial Rights Legal Centre has called on the general insurance industry to act immediately to clean up poor investigation practices and rein in their investigators following the release of a damning report by ASIC on car insurance investigations.
The report, Roadblocks and Roundabouts: A Review of Car Insurance Claims Investigations, found that:
- Investigations targeted mostly valid claims with over 70% of investigated claims found to be valid and then paid;
- Only a very small number of investigated claims being declined due to fraud (4%). 10% for other reasons. 15% were withdrawn;
- Interviews felt like interrogations,
- Interviews were excessive and long
- Information requests were often onerous and over the top and
- No support was provided for those with particular needs like the need for an interpreter.
“ASIC’s report confirms the experiences that our clients tell us on our Insurance Law Service line,” said Financial Rights Legal Centre’s Director of Casework Alexandra Kelly.
“We regularly hear from consumers subjected to threats, bullying behaviour and harassment by unregulated insurance investigators. Consumers endure incredibly long interviews – sometimes over five hours – routinely describe being treated like criminals, and many with poor English skills are not given access to appropriate translators.
“We compiled our own report based on our clients’ experiences in 2016 titled Guilty Until Proven Innocent, and the sector’s own Code Governance Committee conducted an investigation highlighting similar issues. Despite a mountain of clear and overwhelming evidence, the general insurance sector have yet to clean up their act.
“We have been waiting now for a new set of standards for almost three years – all the while these egregious practices have continued unabated. The proposed draft set of standards will be a good first step but still need strengthening to ensure a fairer process. Insurers must be required toprovide clearer information to consumers, undertake more oversight of outsourced investigators and to wrap up all investigations in four months – not the sometimes years they currently take.
“Enough is enough. The general insurance industry needs to introduce a strong and comprehensive set of best practice standards for insurance investigations to restore trust and confidence in the insurance industry. The Federal Government must also act swiftly to implement Commissioner Hayne’s recommendation in the Banking Royal Commission Final Report to amend the Corporations Regulations so that the handling or settlement of insurance claims, or potential insurance claims, is no longer excluded from the definition of ‘financial service’. ASIC must be empowered to intervene in this area.”
Media contact: Peter Vincent 02 8204 1372