The Australian Securities and Investments Commission (ASIC) has commended the insurance industry on its handling of motor claims.

An ASIC review examined more than 1.2 million motor claims made in 2009 against eight insurers which hold around 75% of the direct retail car insurance market.

The purpose of the review was to examine general insurance claims-handling and internal dispute resolution procedures across the industry, with motor claims chosen as a representative product because it is the most commonly purchased retail general insurance product in Australia.

The review found that only 3317, or 0.28%, of claims were formally denied, with another 7% withdrawn prior to a decision being made.

ASIC Commissioner Peter Boxall says the findings “are important in ensuring confident and informed financial consumers”.

“Because no insurer-specific comparative data exists for the claims-handling performance of Australian insurers, it is difficult for consumers to shop around on the basis of quality, efficiency or fairness of claims-handling.”

The review also found a relatively low level of claims-related complaints with the majority resolved at the first point of contact and only 5885 of the total 26,500 complaints received by participating insurers in 2009 being progressed to an internal dispute resolution team.

ASIC made nine recommendations from the review, including that insurers should record information relating to both denied and withdrawn claims, which should be regularly analysed and reviewed.

“We think that recording and reviewing information about both denied and withdrawn claims is important, as it may assist in identifying issues relating to disclosure, advertising, sales processes, product design or internal procedures,” Dr Boxall says.

The report also recommends that insurers should disclose whether a withdrawn claim is likely to result in an increase to future premiums; that insurers should consider providing written confirmation of a decision to withdraw a claim; and that a claims denial by frontline staff should be reviewed before the decision is confirmed.

In addition, ASIC will follow up on specific issues with individual insurers, and will review its own consumer education material.

The Insurance Council of Australia says it welcomes ASIC’s findings and will “be talking to ASIC and other stakeholders about the need to take these recommendations into account when assessing compliance with the industry’s General Insurance Code of Practice”.