The Australian Consumers Insurance Lobby Inc (ACIL) has met with the Australian Securities and Investments Commission (ASIC) to raise concerns about proposed revisions to the General Insurance Code of Practice.
ACIL has expressed particular unease with the recommendations outlined in the Independent Review’s Initial Report and the Use of Expert Reports Industry Best Practice Standard, contending that the changes fall short of protecting consumers when it comes to the role of expert reports in insurance claims.
These concerns were echoed in the Flood Failure to Future Fairness report from the House of Representatives, which pointed out systemic problems in the insurance claims process, including inconsistencies in expert reports, communication gaps, and delays in resolving claims.
Both ACIL and the report have called for urgent revisions to the code to better address these issues and protect consumers from the impact of faulty expert reports.
Tyrone Shandiman, ACIL chairperson, emphasised these points in a statement after the meeting, claiming that the proposed standards do not tackle the root of the issue.
“The current proposals guide only how insurers should use expert reports but don’t deal with the source of the problem – the expert reports themselves,” he said. “Insurers are not experts; how are they to know what appropriate evidence or investigation methods are, or what the building codes are?”
He also referred to the findings from the General Insurance Code Governance Committee’s Thematic Inquiry into Making Better Claims Decisions, which found that many expert reports used by insurers lacked clear connections between the cause of damage and the loss claimed.
“We saw too many reports that failed to provide a clear and demonstrable link between the cause of damage and the loss. We did not always see sufficient evidence to justify the assessments,” Shandiman said.
ACIL is advocating for changes to Section 5 of the code to directly impose stricter standards on the experts who prepare these reports.
According to Shandiman, many claims are unfairly denied because of vague or incomplete expert reports, leaving consumers in difficult financial situations.
“We have seen far too many cases where a single sentence, or even a single word in an expert’s report, becomes the basis for an unfair denial – leaving consumers in financial ruin, stripping away their livelihoods, destabilising families, and causing severe mental health struggles,” he said.
He said experts and insurers must be held to higher standards to ensure fair treatment of claims and avoid placing unnecessary burdens on consumers.
ACIL also raised concerns about the Insurance Council of Australia (ICA) seeking ASIC’s approval of the revised code without addressing these issues.
Shandiman warned that if the code were endorsed in its current form, significant gaps in consumer protection could remain, continuing to allow problems in claims handling practices.
“ASIC’s prior statements indicate that the regulator is closely monitoring claims handling practices in the industry, making it essential for the ICA to take these concerns seriously and ensure consumers are not left disadvantaged by the gaps in oversight,” he said.
In addition to its push for better oversight of experts, ACIL is advocating for a system that allows consumers to challenge expert reports without bearing the costs of hiring their own experts, which can be prohibitively expensive.
The current process, ACIL argues, creates an imbalance of power, as many consumers cannot afford to dispute an expert’s opinion.
ACIL plans to continue working with ASIC, the Australian Competition and Consumer Commission (ACCC), and other regulatory bodies to push for necessary reforms to the code of practice.
In response to ACIL’s concerns, the ICA defended the Best Practice Standard for engaging expert professionals like engineers and builders during the claims process.
A spokesperson for the ICA stated that the standard aims to ensure that insurers follow a consistent approach when working with experts and that experts are required to base their reports on verifiable facts.
The ICA spokesperson also said that the standard contains safeguards to maintain the objectivity of expert reports, rebutting suggestions that insurers might influence the findings.
The spokesperson said that while the standard governs how insurers use these reports, the experts themselves remain subject to their own professional industry regulations.
