ACIL pushes for stronger insurance code overhaul

The Australian Consumers Insurance Lobby Inc (ACIL) has raised issues regarding the recent General Insurance Code of Practice Independent Review Initial Report and the Use of Expert Reports Industry Best Practice Standard.

ACIL, which represents insurance consumers, argues that the review does not sufficiently address critical concerns related to the role and accountability of expert reports in insurance claims.

Issues with expert report standards

Although the Use of Expert Reports Industry Best Practice Standard provides guidance on how insurers should use expert reports, ACIL pointed out that there are no specific requirements for the experts themselves regarding the accuracy or quality of their reports.

ACIL claims that insurers have been slow to adopt the new standards, and when concerns are raised about expert reports, insurers often fail to address them.

The consumer advocacy group identified several key areas where improvements are necessary:

• Evidence-based conclusions: Experts should be required to provide sufficient evidence to support their findings.
• Accurate application of regulations: Reports must properly reference relevant building codes and industry regulations.
• Consideration of certified solutions: When assessing defects, experts should consider whether certified performance solutions have been used.
• Comprehensive investigations: Experts should conduct thorough investigations, especially in complex cases, and follow up with additional assessments if necessary.
• Transparency on inconclusive findings: Experts should clearly state when their findings are inconclusive, rather than making interpretations that could favour insurers.

The group also raised concerns about the potential for insurers to influence expert opinions and vendor contracts that might incentivise claim denials or reductions. Additionally, consumers often bear the financial burden of disputing expert reports, which the group believes creates an imbalance.

ACIL is advocating for insurers to offer independent options for consumers to challenge expert findings.

ACIL’s call for reform

ACIL is urging the ICA to address these gaps in the revised General Insurance Code of Practice to protect consumers from the lack of oversight in expert reporting.

Shandiman said unclear regulations around expert reports leave consumers at a disadvantage.

“The lack of sufficient regulation around expert reporting standards creates a power imbalance that harms consumers, who often bear the financial burden of challenging expert opinions,” he said.

He also pointed to the Australian Securities and Investments Commission (ASIC), which has signalled that it will increase scrutiny of claims management.

Shandiman noted that insurers could face greater regulatory pressure if these issues are not resolved proactively.

ACIL affirmed its commitment to working with the ICA to address these concerns and ensure that the Code of Practice offers stronger consumer protections.

General Insurance Code of Practice Review

The review of the General Insurance Code of Practice, led by an independent panel chaired by former Australian Prudential Regulation Authority (APRA) deputy chair Helen Rowell, recently released its initial findings.

The panel’s report included recommendations for updating the code based on 23 submissions from various stakeholders, including consumer groups, insurers, and regulators.

Rowell stressed the importance of the code in guiding insurers and protecting consumers, especially small businesses and individuals. She noted that the review presents an opportunity to significantly improve consumer protections.

A second consultation paper is expected to be released by the end of 2024.