Insurers should act to stop perpetrators of financial abuse cancelling policies without victims knowing, the Centre for Women’s Economic Safety says. 

The centre has today made 19 recommendations to insurers, government and regulators that it says will make it harder for people to misuse insurance products as a tactic of coercive control. 

Centre CEO Rebecca Glenn says abusers change or cancel joint policies, or redirect claim payments to accounts that partners cannot access, while policy terms often preclude cover for damage caused by a policyholder. 

“These actions may leave victim-survivors, usually women, in very difficult financial circumstances, with damaged assets and no recourse through insurance,” she said. 

“There are simple steps insurers can take to assist victim-survivors of financial abuse and to prevent it occurring in the first place.” 

The centre wants insurers to include a “conduct of others” clause as standard to allow victims to claim when perpetrators deliberately damage property. 

It also calls for changes to the Insurance Contracts Act. 

For more legally complex reforms, provisions need to be enforced by regulation “rather than simply relying on the good faith of insurers”, it says.  

“It is time for deliberate and systematic change to protect and support those who are subject to this debilitating and devastating form of domestic and family violence,” the centre said. “Many of the scenarios could be avoided if insurers made some simple changes to their policies and processes, provided comprehensive and ongoing staff training, and created specialist teams.” 

The Insurance Council of Australia says it welcomes the centre’s research into the misuse of general insurance products for financial abuse and it is “committed to working with industry and regulators to combat product weaponisation”. 

“ICA strongly condemns financial abuse of any kind and welcomes the report’s alignment with the insurance industry’s commitment under the General Insurance Code of Practice to address and combat financial abuse, and ensure the safety and financial security of customers,” a spokesperson told insuranceNEWS.com.au. 

Suncorp’s domestic and family violence plan says that for joint policyholders it ensures it is “paying the appropriate beneficiaries under a policy pertaining to the particular claim and circumstances”. 

In examples of financial abuse cited by the centre, one woman, Kym, says her ex-partner “ceased paying [insurance] and let it lapse without my knowledge [then] took out a policy online … in his name only. The house mysteriously burned down … and he was ordered to disclose all of the particulars of the [insurance] settlement and where the money was ... and to date he has refused to do so.” 

Liz says her partner took the whole insurance payout when a car was written off, despite it being a joint policy, with “no query or follow up or intervention from the insurer”. 

The centre says its proposed changes would help “disrupt domestic violence in Australia”, and while insurers are making improvements, there is a lack of consistency across the industry. 

“Some victim-survivors will receive support that is empathetic and trauma-informed ... Others continue to struggle with dismissive or judgmental staff, risks to their safety or compounding financial hardship. The Insurance Contracts Act needs to be modernised to strike a fairer deal and create consistency across the sector, with a clear framework for insurance companies already working hard to update their policies, processes and practices to improve customer outcomes.”   

The report says every insurer should introduce a standalone domestic and family violence provision that allows a customer to lodge a claim in circumstances where they might ordinarily be precluded; treat joint insurance policies as composites when advised of separation; ensure all parties have access to the indemnity where cash settlements are made to co-insureds; and provide mediation where parties are unable to agree. 

The Insurance Contracts Act should “include domestic and family violence as a reason that an insurer may not refuse or reduce a claim”, it says. 

See the report here.