Breaches relating to pricing lapses and claims handling have emerged as key concerns as the General Insurance Code Governance Committee (CGC) released today a paper seeking feedback on ways to improve better compliance. 

The CGC says it is developing its compliance priorities for the 2023/24 work program and is keen to hear from stakeholders about any new issues, particularly those that are “causing or may cause harm” to general insurance customers including individuals and small businesses. 

“Our Priority Monitoring Framework (PMF) helps us manage our priorities and focus our work so we can help Code subscribers comply with their obligations to the Code and improve customer outcomes,” the paper says. 

“The PMF ensures we use our resources effectively and conduct crucial aspects of our work with rigour and consistency.” 

The consultation comes after a “substantial” increase in significant Code breaches, especially in relation to a “large” portion over charging of premiums and other pricing errors. 

According to the CGC 2021/22 annual report released last week, insurers continue to record significant breaches in areas of the Code related to honest, efficient, fair, transparent and timely dealings with customers. 

“The rise in significant breaches of Code sections covering the sales process or buying insurance is concerning,” CGC Chair Veronique Ingram said. 

“In many cases, insurers have been breaking pricing promises for years. Overcharging premiums is harmful to consumers and insurers should be doing more to prevent this.” 

CGC says the annual report covers analysis of compliance with the current Code and its previous 2014 version. 

“Although the 2020 Code is currently in effect, we are still receiving reports of significant breaches from subscribers that relate to the 2014 Code,” the report says. 

“Some of the significant breaches identified and reported to us in 2021/22 also occurred when the 2014 Code was in operation.” 

The number of significant breaches as reported by 22 Code subscribers nearly doubled to 116 from 57 in the previous year, the report says. The 116 breach matters spanned 203 individual obligations of the 2014 Code (41% of non-compliance) and the 2020 Code (59%). 

These breaches affected more than 1.7 million consumers and resulted in remediation payments of more than $52 million. 

Another area of concern relates to a near 18% rise in significant breaches covering claims handling. 

Code subscribers reported significant breaches related to claims at a steady pace throughout 2021/22 and the increase over the period does not appear to have been driven by extreme weather, the report says. 

However, the CGC is expecting the numbers to worsen in light of the flood catastrophes and other disasters that have unfolded in the last several months, made worse by added strains from supply shortages of key building materials and tradies. 

“We expect more significant breaches related to claims handling in 2022/23,” the report says. “The storms and subsequent flooding caused widespread damage in many communities, with thousands of people still affected months later.” 

Closing date for the CGC consultation is January 31. 

Click here for the consultation paper and here for the annual report.