The General Insurance Code Governance Committee says the number of breaches reported last financial year rose 34% to 77,886 as the industry continued to struggle meeting claims handling time frames. 

Claims handling breaches grew 16% to 45,331, with the commitment to tell policyholders about their claims’ progress “at least every 20 business days” the most broken obligation overall. 

“We know that insurers were dealing with greater volumes of claims, but claims handling time frames are crucial for customer wellbeing,” committee Chair Veronique Ingram said. 

“It is troubling that we saw such significant numbers of breaches in this reporting period.” 

The annual data and compliance report for the year to June 30, published today, shows a small cohort of insurers were responsible for most of the claims handling breaches.  

“The issues appear to stem from insufficient resourcing, training and technology investment by insurers, and they must do more to address these,” Ms Ingram said. “Ultimately, addressing these underlying issues will lead to better outcomes for customers.” 

Others improved their performance on time frames and Ms Ingram notes some insurers have worked hard on reducing breaches after reports in recent years from Deloitte, the Australian Securities and Investments Commission (ASIC) and the Code Governance Committee. 

The committee says it has engaged with the insurers that are driving the increase in claims handling breaches to understand their remediation efforts. 

“If we observe sustained non-compliance, without commitment to improve and implement changes, we will consider further action, including sanctions where appropriate,” the report says. 

Complaints handling obligation breaches increased 82% to 17,238, with the rise exacerbated by inadequate communication with consumers regarding claims. 

The committee says reported complaints grew 61% to 1.18 million, the fourth consecutive year of rises. 

“The increase this year can be attributed in part to an expanded definition of complaint, but we have seen these numbers go up for several years now, which is a worry,” Ms Ingram said. “It is a consequence of the increase in claims handling breaches. As we see the breaches go up, we see more complaints come in.” 

Some 567,406 complaints were about “buying insurance”, with insurers attributing this mainly to grievances regarding premium increases. 

“To reduce such complaints, insurers should provide a transparent breakdown of the components of the premium, so it is clear to consumers why their insurance premiums are increasing,” the report says. 

The number of consumers affected by breaches totalled 185,796 and the financial impact was $2.14 million. 

The number of policies issued rose 10% to 40.2 million while the number of claims lodged grew 5% to 5.1 million. More than $20 billion was paid out in claims, up 36%. 

Ms Ingram says Code Compliance Committee observations on resourcing, training and technology support findings and recommendations published by Deloitte, ASIC and the Australian Financial Complaints Authority. 

“We understand that insurers are seeking to integrate these recommendations into operations, and we expect to see tangible improvements in the next reporting period,” she said. 

The report is available here.

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