The General Insurance Code Governance Committee says failure to update policyholders on the progress of claims was the top reported breach last financial year and it is engaging with subscribers that have fallen short of requirements. 

The number of claims handling breaches grew 16% to 45,331 overall, with failings on the commitment to tell policyholders about their claims’ progress “at least every 20 business days” accounting for more than half the total. 

Breaches were attributed to processes and procedures, while insurers also cited issues with resourcing and high volumes of claims. 

A small cohort of insurers were responsible for most of the claims handling breaches, while others improved their performance on time frames. 

Committee chair Veronique Ingram says claims handling time frames are crucial for customer wellbeing and the increase in breaches is “troubling”. 

The committee has encouraged insurers to explore technological solutions to streamline processes, such as reminders prior to deadlines and automated updates via email or SMS, provided they offer meaningful information. 

“We have engaged with the insurers that are driving the increase in claims handling breaches to understand their remediation efforts,” the committee’s annual data and compliance report says. 

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

Total breaches reported last financial year rose 34% to 77,886. 

Other top five breach areas included: keeping a policyholder informed about the progress of a complaint at least every 10 business days; complying with the Privacy Act and other requirements when using personal information; making a claims decision and telling the insured within 10 business days once all relevant information is in; and acknowledging a complaint has been received. 

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.”

Ms Ingram says observations in the committee's report 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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