A grieving mother who lost her son to diabetes faced further heartache when she was not only burglarised but was also treated callously by her insurance company’s fraud investigator, it has been alleged.
Violet, not the claimant’s real name, lodged a home contents claim after a thief broke into a back shed containing her deceased son’s belongings and got away with $20,000 worth of items.
The third-party investigator allegedly accused Violet of being a liar and of stealing the items herself, pelted her with irrelevant questions including about her plans for the weekend and the death of her son; and even told her: “No wonder you don’t have a husband,”
The Sydney Morning Herald reported.
Violet’s story is one of many cases that have prompted the general insurance industry’s monitor, the Code of Governance Committee, to look into how external investigators are being used by the industry to detect and avoid paying out fraudulent claims.
While there is a need to crack down on fraud, which costs insurers $2 billion a year and subjects honest policyholders to higher premiums, consumer advocates said the lack of rules for investigators has seen them bully, threaten, and intimidate claimants,
SMH said.
A new committee report has revealed that when insurers outsource claims-related functions to “service suppliers,” including investigators, compliance with the Code of Practice was “unpredictable” and the degree of oversight in some cases was “inadequate.”
“As well, there is not enough guidance provided to external investigators when interviewing consumers,” committee chair Lynelle Briggs told the publication.
“We also found that some respondents have authorised [investigators] to handle complaints when [insurance companies] are required to perform this function [and] some respondents’ contracts with [investigators] do not align with the code’s requirements.”
The committee urged the industry to develop a set of best practice standards, and made 30 recommendations, including that interviews do not exceed two hours; that questions be “relevant, fair, and transparent”; that investigators assess whether claimants have special needs and provide them with additional support; and that guidelines be set up for interviewing minors.
Drew MacRae from consumer advocacy group Financial Right Legal Centre (FRLC), said there was indeed a systemic problem with insurance investigations and that this problem should be quickly addressed.
“We believe the recommendations should be implemented straight away because we think the industry has been on notice for enough time,” he said.
“One of the key recommendations is communication, because we found that most people had no clue that they were being investigated, and if they did, they had very little information about what the process involved and their rights.”
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