The General Insurance Code Governance Committee (CGC) has expressed concern over the volume of home insurance claims being denied by insurers due to wear and tear issues, with almost half of such denials later being overturned where policyholders complained.
Around 11,000, or a quarter, of all denied home insurance claims resulted in a complaint in 2021 to 2022, CGC said, citing data collected from participating insurers, as reported by The Lismore App.
Over half of the denied claims were decided based on maintenance or wear and tear exclusions and nearly half of those were later overturned in favour of consumers.
CGC chair Veronique Ingram said the committee was “concerned” that too many claims were “incorrectly denied.” This could show that there may be “underlying systemic issues” in decision-making when wear and tear is a factor, Ingram said.
She noted that the CGC expects insurers to “carefully consider” various factors when assessing claims to produce “reasonable, fair and sound” decisions.
The CGC report also found that 45% of expert assessments provided a recommendation for a decision on a claim.
According to Ingram, there were many instances where a claim was denied following a recommendation from an expert who failed to justify their assessment.
“Of course, experts have expertise, and we rely on this in many situations. But it is also important to remember that denying a claim involves more – there are other factors that we expect insurers to consider when weighing up a decision,” Ingram said.
Insurers can leverage the information and data on overturned claims decisions to provide better outcomes for consumers, Ingram said.
Such data can provide “valuable insights” and reveal systematic issues in systems and processes, Ingram said, urging insurers to realise that collecting and analysing data are fundamental to understanding and improving what is happening.
“And, importantly, it can lead to better decisions and a reduction in complaints,” she said.
The CGC study examined the way insurers use information and data from complaints to improve business processes, practices, and compliance with the General Insurance Code of Practice.
The inquiry was primarily aimed at examining insurers’ use of information and data from complaints for improvements, but the report revealed a rather alarming issue.
The CGC report applauded insurers that have made improvements based on data.
Meanwhile, it urged all insurers to boost their data analysis techniques and work to implement necessary changes.
