A review by the Australian Securities and Investments Commission (ASIC) of insurance companies’ practices when investigating motor vehicle claims has led the Commission to believe consumers are being poorly done by.
ASIC said its research “raises concerns that consumers are being worn down by a lengthy and confusing process”.
The research revealed that while only a small proportion of claims were investigated, more than 70 per cent were found to be valid and paid with just four per cent declined because of fraud.
ASIC Commissioner Sean Hughes said many consumers who had their claim investigated and eventually paid reported poor practices by insurers and their investigators.
Mr Hughes said these included interviews that felt like interrogations; interviews in consumers’ homes, excessively long or successive interviews, and interviews without notice.
He said consumers also claimed the companies made onerous, unexplained and successive information requests for a wide range of documents including criminal record checks, social media histories, birth certificates, telephone and text message records, financial statements for every bank and loan account and information about family members and friends.
He said that in addition, the needs of consumers with limited English literacy were not catered for.
“Fraud is a serious issue that insurers need to investigate appropriately to ensure that only legitimate claims are paid,” Mr Hughes said.
“However, ASIC is calling on the industry to respond to these findings by implementing better standards, improving written communication to consumers, and reviewing how claims are selected for investigation.”
He said insurers were putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims were ultimately paid.
“Consumers deserve a fair process for investigated claims. Insurers must live up to the promise to pay on the policy where the claim is a genuine one,” Mr Hughes said.
ASIC’s 15-page report can be accessed at this PS News link.
