The Insurance Council has created an Expert Report Best Practice Standard, aiming to provide more clarity for insurers and their customers as criticism continues to flow following the 2022 flood disasters.

“We know that customers have too often found this process to be unclear, and as non-experts feel like they are at a disadvantage,” ICA CEO Andrew Hall said.

“We have heard this feedback loud and clear. That is why we have developed [the standard] to provide consistent guidance on the use of expert reports for insurers and greater clarity for customers about their rights and expectations.”

Experts such as hydrologists, engineers, builders and specialist tradespeople typically produce reports following site inspections to determine the cause of damage or extent of repairs needed.

Problems with such reports were discussed during the House of Representatives inquiry into insurers’ handling of the 2022 floods and have been raised in other forums.

The General Insurance Code Governance Committee last year released a paper highlighting expert report issues and the number of claims incorrectly denied based on wear and tear or maintenance exclusions. Committee chair Veronique Ingram said there were too many instances of claims being denied following recommendations from experts whose reports failed to justify their assessments. 

The Australian Financial Complaints Authority has also urged insurers to review the way expert reports and submissions are prepared after a rise in “complex” disputes.

The new ICA standard covers pre-report commissioning, the document itself, and its use. A fact sheet for consumers outlines what they should expect. 

The standard says an expert should be required to affirm that their opinion is objective, and insurers should disregard any statements or opinions that are outside a report’s scope or the expert’s area of expertise. “For example, if an expert expresses an opinion about whether the claim should be accepted or denied, or if a hydrologist expresses an opinion which would be more suited to the expertise of a builder,” it says.

Mr Hall says ICA will recommend the independent code review committee reference the standard in the next version of the industry code of practice.

Financial Rights Legal Centre senior policy and advocacy officer Drew MacRae says the ICA standard is a positive first step, but ensuring compliance and enforceability is important.

“Building in appropriate wording is something that we are hopeful would emanate from the code review,” he told insuranceNEWS.com.au.