The Australian Securities and Investments Commission says an improvement in complaints handling culture is needed to address insurer failings in responding to dissatisfied customers.

A review has found participating insurers failed to identify one in six customer complaints, systemic issues were not being picked up and there were significant variations in non-compliance with communication obligations.

Insurers identified only 85 systemic issues from more than 1.4 million complaints, whereas the Australian Financial Complaints Authority found 11 systemic issues from about 16,000 complaints that reached its external dispute resolution process.

“While we identified a number of root causes contributing to the failures observed in this review, such as deficiencies in systems and processes, staff training and resourcing, it was clear that a key driver for the most serious issues was an absence of a positive complaints management culture,” ASIC says.

The review of 11 insurers examined compliance with requirements outlined in the commission’s internal dispute resolution regulatory guide (RG 271), released in September 2021.

Commissioner Alan Kirkland says the issues are disappointing, particularly because insurers were told to improve when ASIC examined claims handling after the 2022 Queensland and NSW floods.

The regulator will be asking the insurers involved in the review to provide an action plan outlining how they plan to improve and will write to individual businesses with specific feedback.

“Failures by insurers to deal fairly and in good faith with customers is a 2025 ASIC enforcement priority – this includes ongoing problems with internal dispute resolution processes,” a spokesman told insuranceNEWS.com.au.

“We will use all our regulatory tools, including enforcement action, to address the issues identified in our review.”

The participating companies were Suncorp’s AAI; Allianz Australia; Hallmark General Insurance Company; Hollard and Hollard Insurance Partners; IAG’s Insurance Australia Limited and its Insurance Manufacturers of Australia joint venture with RACV; QBE; RAA Insurance; RACQ Insurance; and Youi.

The Insurance Council of Australia says companies have been investing in system improvements, both human and digital, and the sector has been focused on lifting performance – including on complaints handling – in the face of larger, more frequent and more costly events.

“The performance of some insurers in this regard is noted by ASIC, but it is clear that others need to do better,” an ICA spokesperson told insuranceNEWS.com.au.  

ICA says senior industry stakeholders will consider ASIC’s report, and an initial industry response will be provided in coming weeks to code review and parliamentary inquiry recommendations. A Deloitte progress report will also be finalised in coming weeks.  

Consumer and financial counselling groups say they are unsurprised by ASIC findings that reflect the experience of advocates and people seeking help, and which follow previous reviews.

“How many more reports are needed for insurers to begin making the investments and changes they need to make the services and products they provide fit for purpose? The time for action from the insurance sector is now,” Financial Rights Legal Centre director of casework Alexandra Kelly said.

The ASIC report is available here. 

See Analysis.