The Financial Rights Legal Centre (FRLC) has called for regulatory oversight of general insurance claims reporting after a report it commissioned found issues with the data practices of insurers.

Released last week, the Privacy Practices in General Insurance report says insurers are failing consumers with “shoddy” data practices, such as relying on erroneous historical information to assess new claims.

The report also found a series of problems including a lack of transparency over the sharing of policyholders’ data.

A field study found at least one material error in every My Insurance Claims Report document obtained by participants in the FRLC research. The claim reports are provided by the Insurance Reference Service (IRS), the industry’s shared database, for a $22 fee.

Incorrect or misleading claim status descriptions, old claims not being removed, missing claims, incorrect claim descriptions and wrong address are among the errors found.

FRLC says the Government should regulate industry-wide reporting of general insurance claims, in the same manner that a scheme has applied to credit reporting since the early 1990s.

It is one of 16 recommendations made by the FRLC. The other proposals include improving the visibility of the availability of insurance claims history reports and offering a workable mechanism for consumers to obtain a reliable claims history.

The Insurance Council of Australia (ICA) has responded to the FRLC report, saying efforts are underway to improve the IRS.

“IRS and its 16 insurer members are well advanced in a significant data improvement program in 2022 to address IRS data quality and consistency across the 16 insurers that will address many of the points raised in the FRLC report,” a spokesman for ICA said.

“The Insurance Council welcomes the Financial Rights Legal Centre’s report, which canvases issues relating to IRS.”

FRLC says the IRS service does not have the appearance of a scheme designed to serve its nominal purposes.

“It appears very likely that, to the extent that insurers place any reliance on IRS, it misleads as much as it informs,” the consumer advocate says.

“In its current form, the data provided could be harmful to the interests of a proportion, and perhaps a significant proportion, of claimants against general insurance policies.”

The FRLC report is the fourth and final instalment of a series of studies looking at the future of insurance ahead of the industry’s inclusion in the Consumer Data Right scheme.

Click here for the report.