Australian insurer hit with sanctions over code breaches

Action follows finalisation of code review

Australian insurer hit with sanctions over code breaches

Insurance News

By Roxanne Libatique

The General Insurance Code Governance Committee (CGC) has taken enforcement action against an insurer for breaches of the General Insurance Code of Practice, imposing a $100,000 Community Benefit Payment.

The breaches, which involved failures in claims and complaints handling, affected 35 customers, including 22 impacted by severe weather events.

CGC chair Veronique Ingram said the insurer did not meet the expected industry standards in its response to policyholders.

“When customers turn to insurers for help during times of crisis, they have the right to expect timely, effective, and fair support. This insurer fell well short of that expectation,” she said.

Insurer breaches General Insurance Code of Practice

According to the CGC, internal operational changes at the insurer led to process breakdowns, resulting in delays and inadequate repairs. These failures extended the difficulties faced by policyholders awaiting claim resolutions.

“The harm caused by these failures underscores the critical need for robust claims management practices,” Ingram said.

The insurer was also found to have deficiencies in its complaints handling, with some customers required to submit multiple complaints before receiving a resolution. In one case, a policyholder lodged 12 complaints before their issue was addressed.

Insurer addresses failures

To rectify the situation, the insurer has paid $1.2 million in compensation, finalised outstanding repairs, and reviewed internal processes to prevent similar occurrences.

Ingram said the committee acknowledges the insurer’s commitment to fixing its mistakes and compensating impacted customers.

“The proactive response is a reminder to all insurers that swift and transparent action can restore trust after things go wrong,” she said.

As part of the sanction, the insurer will make a $100,000 Community Benefit Payment to a designated charity.

Ingram said this Community Benefit Payment reflects the severity of the harm caused while ensuring a positive outcome for others who may find themselves in vulnerable situations.

“The insurer’s actions immediately after identifying its failures set a strong example for the industry,” she said. “Taking responsibility, comprehensively rectifying harm, and learning from mistakes are the standards we expect all insurers to uphold.”

The CGC opted not to publicly identify the insurer, citing its cooperation and remedial actions. The committee will continue monitoring industry compliance, stressing that insurers must maintain accountability and ensure their claims and complaints handling processes are effective.

Code review recommends consumer-focused reforms

The committee’s action follows the finalisation of an independent review of the General Insurance Code of Practice, with its final report proposing changes to improve consumer protections, claims handling, and support for vulnerable policyholders.

The review, which began in November 2023, examined whether the code remains aligned with consumer needs, regulatory requirements, and industry expectations.

Led by former Australian Prudential Regulation Authority (APRA) deputy chair Helen Rowell, alongside Gerard Brody and Paul Muir, the review panel released an interim report in September 2024 with 101 recommendations. The final report retains all proposals from the earlier findings.

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