The Australian Securities and Investments Commission (ASIC) has started “several investigations” into claims handling and has also indicated it will be taking a closer look at home cover wear and tear exclusions and internal dispute resolution. 

The regulator last week released a report, Navigating the storm: ASIC’s review of home insurance claims, that highlighted areas for improvement in handling home cover claims. Separately, it is looking more widely at possible shortcomings. 

“We have begun several investigations related to insurance claims handling practices,” a spokesman told insuranceNEWS.com.au. “This is not limited to insurers who participated in our research and is not limited to conduct observed specifically in our research.” 

ASIC also says that this financial year it will conduct further work on potential unfair contract terms relating to maintenance and wear and tear issues and will complete more work on reviewing the performance of insurers’ dispute resolution functions. 

The spokesman says ASIC is concerned that the more broad a wear and tear exclusion is, the more likely it could be considered an unfair contract term, and insurers should try and make definitions as specific as possible so consumers can be confident about what’s covered or excluded. 

“We are also monitoring how these exclusions are applied – where an insurer asserts that damage is excluded due to lack of maintenance, they need to be clear about what maintenance they say was lacking and how they say that contributed to the damage,” he said. “As we say in the report, it’s not appropriate to ask the consumer to disprove a mere assertion that a lack of maintenance caused the damage.” 

The review of home claims handling looked at data from more than 218,000 claims lodged between January and March last year from six insurers that cover 63% of the market. Processes were followed for a further six months. 

Some 43% of the claims related to severe weather events including the floods in NSW and Queensland in February and March, with the review acknowledging that insurers were facing pressures due to severe weather events during and prior to the period. 

Findings from the report include that insurers should improve communication with consumers about decisions, delays and complications, and that there should be better project management and oversight of third parties. 

It calls for better recognition and management of expressions of dissatisfaction and complaints, better identification and treatment of vulnerable consumers and better resourcing of claims handling and dispute resolution functions. 

“An insurance claim doesn’t have to be handled perfectly, but it must be handled well,” ASIC Deputy chair Karen Chester said. “Importantly, all five areas we’ve identified for improvement are within the insurers’ control.”