The Insurance Council of Australia (ICA) says the industry made progress in detecting, reporting and remedying Code of Practice breaches last year amid intense pressures from natural disasters and a pandemic.

ICA says it’s reviewing insights and findings from the General Insurance Code Governance Committee (CGC) annual data and compliance report, released yesterday, which included criticisms of the industry’s performance.

CGC Chairman Veronique Ingram says a stubborn persistence in breach cases is “especially disappointing” and “discouraging” after an “abundance of recommendations” detailing how to comply.

ICA points to a number of positives from the data and says insurers are working hard to implement the enhanced 2020 iteration of the code, which comes into effect this year.

“The report covers a year of intense operational pressure for the general insurance industry, which included bushfires, floods and the COVID-19 pandemic,” an ICA spokesman told insuranceNEWS.com.au.

“Pleasingly, the report found 99% of code breaches were self-reported, up 5% on last year, and that significant breaches dropped by 6%.”

ICA says the CGC has noted that breaches previously had been under-reported.

“The ICA welcomes the ongoing improvements undertaken by general insurers to detect, report and remedy breaches and notes the CGC’s view that the industry is taking on board the committee’s advice about interpreting and applying the code,” the spokesman said.

Self-reported breaches totalled 32,870, plus 112 significant breaches, while CGC investigations additionally identified 172 breaches.

The investigations mainly followed Australian Financial Complaints Authority referrals and allegations made by consumers, their legal representatives or advocate organisations.

A “notable difference” in the proportion of financial hardship breaches identified by the committee compared with the level self-reported caused the CGC to warn the standards have never been more important as COVID-19 repercussions continue, while JobKeeper assistance is set to end.

The CGC report is based on data from 49 general insurers and 132 Lloyd’s coverholders and claims administrators. A total of 43.78 million policies were sold to consumers and businesses last financial year.

Most significant breaches related to conducting sales processes efficiently, honestly, fairly and transparently. Just over half of all self-reported standard breaches were of the code’s claims handling standards, many resulting from failing to meet timeframe obligations.

COVID-19 impacts contributed substantially to delays, particularly with an influx of travel insurance claims as firms transitioned to remote working arrangements.

“The committee acknowledges that these unforeseen challenges have had a significant impact on subscribers’ operations,” the report says. “However, we remind subscribers that they are in the business of unexpected challenges and claims handling is a critical pillar of the code.”

Insurers will fully implement the 2020 Code of Practice by July, but new consumer provisions around supporting customers experiencing vulnerability and financial hardship came into effect at the start of January. The updated version also provides stronger enforcement powers for the CGC.