Insurers’ compliance with the General Insurance Code of Practice for the 2010/11 financial year was not affected by the immense pressure put on them during last year’s natural disasters.

According to the Financial Ombudsman Service (FOS) General Insurance Code of Practice Overview 2010/11, total code breaches identified by all sources was 2118, compared to 2193 in 2009/10.

The number of breaches identified by FOS staff or brought to their attention by community legal centres, customers or through annual code compliance reviews, fell to 108 breaches involving 28 companies in 2010/11. This compares to 314 breaches in 2009/10, which was down 42% on 2008/09.

Companies which are signatories to the code are required to conduct internal monitoring and report any breaches to FOS. In 2010/11 2010 breaches were reported by 22 participating companies, compared to 1879 reported by 22 companies in 2009/10.

Of the 108 FOS-generated breaches identified in 2010/11, eight companies were found to have been in breach of the code at least five times during the year. The FOS report does not name any companies.

The majority of the 108 breaches recorded in 2010/11 included 49 related to claims and 47 related to breaches of the complaints-handling provisions of the code.

The remainder involved breaches over insurance sales and responding to catastrophes and disasters.

Unsurprisingly, the largest number of breaches occurred in the second quarter, when the catastrophe claims hit.

According to FOS, 3,810,513 claims were lodged for the year. Of those, 66,296 claims were denied.

This compares to 3,795,165 claims lodged in 2009/10, when 77,453 were denied.

More than 23,000 claims in 2010/11 were elevated to internal dispute resolution, with around two-thirds resolved in favour of the insurer.

See ANALYSIS