Insurers need to invest in better systems processes and internal controls, the Australian Securities and Investments Commission (ASIC) says following a review of Black Summer bushfire claims handling.

The review found some insurers need to improve the quality, accuracy and reliability of claims information recorded, with issues including some data missing where ASIC would expect it to be reported.

“Measuring consumer outcomes, and doing so well, is today’s must-have for the insurance industry,” Deputy Chairman Karen Chester said.

The study involved 8801 claims across 12 insurers, with reviewers collecting and monitoring bushfire-related claims handling data over a 15-month period.

ASIC says findings have been shared with insurers ahead of the upcoming disaster season, and with claims handling legislative reforms set to take effect from January.

“To consumers, the real value of an insurance policy is tested when they need to claim,” Ms Chester says. “It is important that claims are resolved quickly, that the process is consumer-centric, that repairs and rebuilds are timely, and that consumers are supported as well as possible after a disaster.”

Good practices identified included proactively contacting customers in affected areas and paying the maximum temporary accommodation benefit at the outset of claims assessed as a total loss, to provide certainty to claimants.

Insurers also made retrospective changes to broaden policy coverage for fire damage and have undertaken simulation exercises to stress test a response to simultaneous disasters in advance of the upcoming disaster season.

Insurance Council of Australia CEO Andrew Hall says insurers are uniquely placed to understand the impact of natural disasters on communities and the industry takes seriously its responsibility to help consumers in times of need.

“While ASIC identified areas for improvement in relation to data, overall the outcomes revealed improved claims handling practices by insurers, with 99% of claims approved in-full or in-part by insurers and 93% of claims closed as at September 2021,” he said.