Code breach data suggests insurers are still not meeting customer needs and they must devote “serious resources” to preventing problems, the Consumer Action Law Centre says.

The code governance committee’s annual data report, released yesterday, shows the number of breaches dropped 13% to 67,394 in 2023-24, with significant breaches also declining. It also identifies areas where insurers need to improve.

“It’s really disappointing to see that one of the most breached obligations is the basic commitment to provide people with an update on their claim once a month,” law centre policy officer Rose Bruce-Smith said. “That’s not a lot to ask from an industry whose primary business is to respond to claims.”

The report shows premiums received in retail insurance rose 18% to $35 billion, while policies issued declined 0.1% to $40.1 million, which Ms Bruce-Smith says is concerning as living costs hit consumers.

“Complaints are up 18% year on year and 16 insurers haven’t invested in dedicated complaints staff,” Ms Bruce-Smith said. “We expect to see insurers devote serious resources to preventing breaches of the code and address the many deficiencies identified through the independent code review and parliamentary flood inquiry.”

The Insurance Council of Australia has welcomed news of a significant reduction in claims and complaints handling breaches, and notes the need for insurers to address the root causes of breaches.

“Members have been working consistently to improve their processes, systems and operations to meet community expectations and improve the consumer experience,” a spokesperson said.

“This is an ongoing process, particularly as the industry navigates further reform through the parliamentary flood inquiry and independent code review.”  

The most breached obligation in 2023-24 continued to be the requirement for insurers to tell consumers about the progress of their claims at least every 20 days – although the number fell to 10,989 from 28,189 the previous year.

The 18% increase in complaints was largely driven by issues with motor insurance claims and premium increases.

The General Insurance Code Governance Committee says many of the complaints were resolved in favour of customers, which may suggest better communication could have stopped them arising.