The dispute authority has praised the industry for its response to recommendations on the use of expert reports, but says underlying claims handling issues have yet to be addressed.  

Australian Financial Complaints Authority senior manager of general insurance code compliance Jared Orth told a member forum he has seen “significant action” following the code governance committee’s recommendation that reports provide “only factual evidence and avoid recommendations on the outcome of a claim”.  

“In August last year, the [Insurance Council of Australia] published its industry best practice standard for the use of expert reports,” he said.

“We’re also pleased to see how motivated the Association of Insurance Building & Engineering Consultants has been to support these efforts, pushing for best practice standards to be created for the engagement of experts, and offering to work with ICA to develop it.” 

Similar recommendations were made in the federal flood inquiry report and by the industry’s code review panel, which recently said ICA’s response on pricing and enforceability was “not good enough”.  

Mr Orth says AFCA has engaged with individual insurers to observe changes to operations and is conducting a follow-up to review progress.  

“While there’s still work to be done, we see this as a success for the industry and a promising sign of what can be achieved when coming together to tackle big issues,” he said. “It’s also encouraging to see these challenges being addressed head on through the current code review.”  

However, Mr Orth raised concern over rising complaints numbers, revealing that AFCA’s upcoming annual industry report found an 18% increase in cases, including a sharp rise relating to motor cover.  

“What concerns us ... is that insurers have not been able to use these complaints to effectively identify and address systemic issues,” he said.

“We continue to see hundreds of breaches of the same code obligation ascribed to processes and procedures not being followed, without a closer examination of what the true cause may be.  

“Insurers need to proactively identify and address systemic issues and develop internal dispute resolution systems that can help them do this.”

Mr Orth also highlighted a near doubling in the number of breaches related to vulnerable customers, but he says this probably reflects insurers doing more to identify such customers.  

“Now that insurers can better see these customers, we expect breaches to reduce as customers receive the support and assistance they should expect from their insurer. Over the past year, we’ve advocated improvements to the protections and support offered by the code, the adoption of international standards in defining vulnerability, and a shift to place the onus on insurers to identify these customers.

“We’ve seen similar views echoed in the findings of the flood inquiry, an inquiry into financial abuse and in the independent code review, and are encouraged to see the industry committing to address these as well.” 

Insurers at the member forum were also told to better explain the rationale for premium increases, to combat a recent surge of complaints.