The Insurance Council of Australia (ICA) and its insurer members have identified use of wear and tear exclusions in home claims as a priority area for focus. 

It comes after an inquiry by the Code Governance Committee found 55% of denied home claims relied on wear and tear/maintenance exclusions, and that when over 10,000 policyholders complained about denials, half of the decisions were overturned in favour of the consumer. 

The CGC says the findings were a “concerning” trend indicating there “may be underlying systemic issues in decision-making from insurers,” and it was “alarmed” at the rate of overturned declinations. 

The report also said heavy insurer reliance on advice from builders, plumbers, electricians and other tradespeople they appoint raised a question about their “quality and impartiality”. 

The CGC says the inquiry uncovered "issues that we cannot ignore” and insurers “must get on top of this”. It urged that claim assessors carefully consider a range of factors in assessing a claim with the aim of coming to a “reasonable, fair and sound decision”. 

An ICA spokesperson told insuranceNEWS.com.au it is reviewing the findings. 

“The Insurance Council notes the report identified issues around maintenance and wear and tear exclusions in some claim decisions. This report provides valuable learnings for consideration,” the spokesperson said.  

“The ICA recognises the important role the CGC plays in identifying and offering recommendations to the sector and is reviewing the report’s insights and findings in detail.” 

Arma Insurance Brokers Hunter Valley MD Amanda Morris says while insurers do appear to be “hiding behind” these exclusions, she says all sides need to “take on the heavy lifting” to fix the issue. 

“It is really contentious in our industry. The behaviour of insurers is causing mayhem, it is frustrating,” Ms Morris said.   

“I don’t argue that insurers should have to pay – insurance will be unaffordable if lazy claims like broken roof tiles continue to be paid, but there is a happy medium,” she said. 

Safe Hands Insurance Group MD Phillip Carr says the wear and tear exclusion is general and so “incredibly hard to refuse”. 

"The more vague it is, it gives the insurers more wiggle room,” Mr Carr said. 

Consumer Action CEO Stephanie Tonkin says the inquiry numbers are a "glaring statistic,” and incorrectly denying people’s claims "is wrong and causes incredible distress”. 

“This report reveals that insurers are using poor quality expert reports to rely on exclusions to decline people’s home insurance claims,” she said.