The Australian Securities and Investments Commission will publish a research report on the way insurers handle suspected fraud, after finding many cases of legitimate claims being investigated.

Its data indicates more than 70% of claims investigated are found to be valid and paid, with only about 4% declined due to fraud.

Almost 15% of investigated claims are withdrawn, rising to 45% for investigated claims that take more than 360 days to be resolved.

“To better understand the impact on consumers of such a high ‘false-positive’ rate, we are doing some targeted consumer research,” Commissioner Sean Hughes told the Insurance Council of Australia (ICA) Annual Forum last week.

Mr Hughes says the regulator has worked with ICA on improvements in the Code of Practice “as a first step”, while completing its own work in the area.

He says in one research case study a claimant was made to feel like a criminal before winning his payout after hiring his own lawyer and forensic expert.

“Overwhelmingly, consumers in our research say they were just not believed,” Mr Hughes said.

“Insurers should have investigation processes that are fair and reasonable and do not rely on consumers seeking robust and expensive legal representation or being so worn down by the process that they abandon their claim.”