Insurers in Australia have recorded a dramatic increase in breaches of the code of practice related to honest, efficient, fair, transparent, and timely dealings with customers, according to the General Insurance Code Governance Committee's (GICGC) 2021-22 Annual Report.
The report highlights the increase in significant breaches, with a concerning number of cases related to customers being overcharged and other pricing errors. It further revealed that environmental factors had exacerbated the breaches related to claims handling.
GICGC Chair Veronique Ingram said the jump in significant breaches of the code of practice was concerning.
“The rise in significant breaches of code sections covering the sales process or buying insurance is concerning,” Ingram said. “In many cases, insurers have been breaking pricing promises for years. Overcharging premiums is harmful to consumers, and insurers should be doing more to prevent this. The onus lies with the insurers because these types of errors are not easily identified by customers.”
With insurers facing a mountain of claims in 2021-22, the GICGC reiterated the significance of responsive and effective communication with claimants.
“We recognise that severe weather, as well as the ongoing effects of the pandemic, created challenges. This is evident in the number of significant breaches relating to claims handling, particularly delays,” Ingram said. “And while we understand that [facing many claims] puts pressure on the industry, insurers must recognise that delays create problems for people trying to rebuild their lives.
“Ensuring communication is timely and transparent is crucial during the claims-handling process. Doing this well can help claimants through a difficult time and bring down breaches of the code.”
The GICGC is an independent body monitoring and enforcing insurers' compliance with the code of practice, which covers many aspects of consumers' relationship with their insurers: buying insurance, making a claim, options for people experiencing financial hardship, and making a complaint. Its annual report highlighted the significant monitoring work the committee undertook in the past year, including working with stakeholders to obtain valuable insights into the practices of insurers and help them share industry information efficiently.
