General Insurance Code of Practice significant breach remediation payments jumped to $319 million last financial year, affecting 4.6 million consumers, a governance committee annual report released today shows.

In the prior year, significant breaches resulted in remediation payments of more than $52 million affecting 1.7 million consumers, according to the preceding fiscal 2022 annual report.

The Code Governance Committee (CGC) says the top five significant issues in the past year were claims handling timeliness, discounts not honoured, complaints handling, incorrect or missing policy documents and incorrect premiums.

The annual report shows 220 individual significant breaches, up from 203 a year earlier, with 86 referred to the Australian Securities and Investments Commission under reporting that started last December.

Total breaches self-reported by subscribers last financial year will be released in the separate Industry Data Report that will be available by the end of March. In the 2022 fiscal year there were 58,104 self-reported breaches.

CGC Chair Veronique Ingram says a number of code subscribers are failing to report significant breaches in a timely manner, leading to potential risks for consumers and the insurance industry.

“Timely and accurate reporting of breaches is paramount to safeguarding both consumers and the integrity of the industry,” she said.

Subscribers have an obligation to report a significant breach within 10 business days of its identification.

But in 67 significant breaches, subscribers took an average 197 days to report the incidents from the time of identification, and in 92 cases they reported to the CGC on average 87 days after reporting to regulators.

Looking ahead, the report notes the Federal Parliamentary Inquiry into the handling of flood claims, the pending independent review of the code and coming challenges faced by the industry, given the expected increase in natural disaster frequency.

Ms Ingram advises insurers to consider volatile claims volumes as the “new normal” and says recent catastrophes have highlighted that there is “much work for insurers to do” to improve their responsiveness.

“In times of increasing crises, it is imperative that the insurance industry adapts to keep consumers at the forefront of its efforts,” she said. “We will not accept subscribers using the same excuses in relation to poor handling of claims and complaints due to increased volumes.”

The CGC will be monitoring the implementation and effectiveness of remedial actions and taking further action where necessary to prevent consumer harm, Ms Ingram says.

The annual report says the CGC’s investigative work and the accountability it brings continues to have a positive impact on the industry.

“Our inquiry examining the rising number of claims denied on grounds of maintenance or wear and tear exclusions was a vital piece of work,” she said. “The report highlighted systemic flaws in the way claims are handled and we set-out recommendations for systems improvements.”

The report says the CGC is in the early stages of scoping out its thematic inquiry for this financial year, but it’s keen to further explore issues around claim denials being overturned and is seeking to gain a better understanding of the quality controls and oversight insurers have in place to manage external experts.