The General Insurance Code Governance Committee says cash settlements and poor claims handling practices are among its monitoring and enforcement priorities for the year ahead.

Its annual report says the focus includes deficient cash offers, consumers being pressured into settlements and the experience of vulnerable consumers.

On claims handling, it will look at response and decision time frames being extended beyond code requirements, poor communication and poor-quality assessments and repairs.

Other priorities include insurers that under-report breaches and companies not accepting consumers’ delegated authority and “refusing to engage with consumer advocates”.

Last November, the committee held an open consultation on compliance priorities for this financial year.

“We received and reviewed nine detailed submissions from a wide range of stakeholders. These submissions provided valuable insights and recommendations, helping to inform our work plan and guide our engagement strategy for the coming year,” it says.

The annual report shows 225 significant breaches of individual obligations last financial year, up from 220.

Investigations were conducted after potential breaches were identified through allegations and compliance monitoring, with action targeting matters posing the greatest risk to consumers and those that may indicate a broader industry concern.

The committee received 153 breach allegations, down from 193 in the previous 12 months. It completed 66 investigations and identified 47 individual code breaches from those inquiries, up from 26 in the previous period.

More than half the allegations were direct from consumers, while consumer advocates were the source of 15%, consumer representatives 10% and insurers 7%. The Australian Financial Complaints Authority external dispute resolution scheme and its systemic issues team each accounted for 5%.

In June, the committee announced its first financial sanction, with Allianz required to make a community payment of $50,000 to a registered charity. The insurer also paid out $216,807 for overturned claims and made improvements to claims handling processes. 

“This case serves as a reminder to all insurers operating under the code that we will not hesitate to apply sanctions for the most serious and systemic failures,” the report says. “We are currently progressing several investigations where sanctions are under serious consideration.”

The committee has proposed code changes in a submission to an ongoing independent review, including adding the power to name insurers in its annual report.

“We are committed to working with all stakeholders to support the transition to a new, strengthened code that better serves customers,” committee chair Veronique Ingram said.

“A crucial element of this, aside from the key code provisions that protect customer interests, is our ability to name insurers in our reporting. This brings important accountability and transparency.”

The code committee releases a separate industry data and compliance report each year. The last report in May showed 77,886 breaches in the 2022-23 financial year - a rise of 34%.

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