Australian general insurers are showing improvements in compliance monitoring and reporting, yet systemic shortcomings persist in how the sector addresses the underlying causes of regulatory breaches and manages customer expectations, according to new oversight findings.
The General Insurance Code Governance Committee (CGC) has published its Annual Data Report covering July 1, 2023, to June 30, 2024.
The report highlighted a decline in total Code of Practice breaches, alongside an increase in self-reported breaches in categories previously underreported. These patterns suggest insurers are enhancing their internal detection processes.
CGC chair Veronique Ingram noted the increase in breach reporting in historically overlooked areas.
“This is an encouraging sign that insurers are becoming more proactive in identifying and addressing certain compliance gaps,” she said. “Better oversight and more rigorous reporting indicate a shift towards stronger industry standards.”
However, the report identified a recurring issue – many breaches are attributed to standard procedures not being followed, yet little progress has been made in understanding why these lapses occur.
Ingram advised insurers to investigate the source of these issues – whether system design, staff training, or technology gaps – and put mechanisms in place to reduce recurrence.
“Insurers must examine their systems and workflows, explore technological improvements, and ensure staff are adequately trained to identify issues. It is crucial that insurers can prevent issues before they arise,” she said.
The report also noted an 18% rise in customer complaints, driven largely by issues related to motor vehicle claims and increases in premiums.
A significant number of these were resolved in favour of policyholders, raising concerns about how premium changes and claims decisions are communicated.
Ingram said clearer, upfront communication about premium adjustments and claims processes could help reduce disputes.
“If insurers explain premium changes upfront and engage with customers effectively, they can reduce complaints and improve trust,” she said.
Amid compliance concerns and customer complaints, the Insurance Council of Australia (ICA) released a new General Insurance Industry Action Plan in response to recommendations from inquiries triggered by the 2022 South-East Queensland and Northern Rivers floods. These events produced record-breaking insured losses and led to heightened regulatory scrutiny.
The action plan outlined how the general insurance sector will address the 150 recommendations considered relevant to insurers across several reviews.
Of these, 109 have been accepted or accepted in principle, 28 are undergoing further review, and 10 will be assessed on a case-by-case basis. Three pricing-related recommendations were not supported due to legal concerns, including potential conflicts with competition law.
While the ICA maintained that regulating premiums via the Code of Practice is not appropriate, it confirmed that insurers will continue to evaluate pricing structures in response to customer expectations and market conditions.
The strategy also incorporated recommendations from other inquiries, including those examining the impact of climate change on premiums and financial vulnerability. Some reforms have already commenced, including updates to the Code of Practice and new support mechanisms for at-risk customers.
The ICA reaffirmed its commitment to ongoing engagement with government, regulators, and advocacy groups as implementation progresses. Additional changes are expected as the sector aligns with evolving policy requirements and risk conditions.
