The Queensland Floods Commission of Inquiry has recommended that insurers be more open about the information they use to deny a claim.

The commission’s report says the General Insurance Code of Practice should be changed so insurers are required to inform policyholders of their right to request a review when the insurer refuses to provide access to information used to reject a claim.

“Letters notifying policyholders that their claims have been denied should, at a minimum, state the information upon which the insurer has relied in making the decision,” the commission says.

The 658-page report contains a chapter on insurance, although the commission says it received a limited number of submissions about insurance and many of them were not relevant to its terms of reference.

It recommends insurers review their systems and processes to ensure accurate and complete records are made of conversations with policyholders.

The commission says insurers should use policyholders’ preferred method of communication to keep them informed about the progress of a claim, although important decisions should always be confirmed in writing.

The report focuses on eight insurers, based on submissions and reports from groups such as Legal Aid Queensland.

AAMI, Allianz, CGU, CommInsure, NRMA Insurance, QBE, RACQ Insurance and Suncorp Metway Insurance were asked for data on numbers of claims, time taken to decide on claims and the internal dispute resolution process.

Their data showed 73% of household claims were accepted and 27% declined.

The commission says the eight insurers had limited time to provide a large amount of information and that it received a great deal of assistance from many of them.

“Unfortunately, one insurer – CGU – was, in some instances, less meticulous in its responses to the commission’s requirements”, the report says, adding that some of CGU’s responses were incomplete.

The report also examines CGU’s claims-handling and contact with policyholder Sallyanne Doyle, who spoke by phone with CEO Peter Harmer about comments she had made to Brisbane’s Courier-Mail newspaper. Ms Doyle said Mr Harmer told her he had listened to taped conversations she had with CGU. Mr Harmer denied saying this.

The commission accepted Ms Doyle’s account and adds: “Mr Harmer’s conduct was, on this occasion, unprofessional. It seems to have been designed to intimidate Ms Doyle, with an element of bluff (about the existence of recordings).”

CGU GM Claims Donna Walker says the company has made key changes to policies and processes having, like most insurers, learned from the floods.

CGU recently added flood cover to home and contents policies, and Ms Walker says it has already adopted a new procedure of asking customers lodging claims how they want to be contacted on the progress of their claim, as recommended by the report.

She told insuranceNEWS.com.au that CGU stands by Mr Harmer and his recollection of the interaction with Ms Doyle. She says his intention was always to understand Ms Doyle’s concerns as both a customer and as the leader of a delegation of customers.

“As noted in the report, there was no attempt on his part to deter Ms Doyle from persisting with her claim,” Ms Walker said.

She says CGU received more than 3500 household claims from the floods and made every effort to respond promptly and accurately to the commission.

The report says submissions about insurers raised complaints that policyholders were dissuaded from making a claim, could not get through to their insurer by phone and were not informed of the progress of claims. 

“Keeping policyholders informed on a regular basis goes some way towards reducing anxiety and dissatisfaction about delays in the determination process,” the report says, noting that a policyholder who got weekly text messages from his insurer found these helpful.

The Insurance Council of Australia (ICA) says it will discuss with members the reviews of their record-keeping, but it is likely many have already reviewed procedures.

It says the commission accepted industry advice that it would be prohibitively expensive and difficult to tape all conversations with policyholders.

Recent changes to the insurers’ code of practice mean policyholders will be told of their right to ask for copies of the information the insurers relied on to assess the claim and that they can also request a review of a decision.