The Financial Ombudsman Service (FOS) has defended insurance companies against allegations they have not informed customers of their right to access dispute resolution facilities, and also questioned the role of plaintiff law firms in the process.

In an appearance before the House of Representatives inquiry into the insurance industry’s response to disasters, Insurance Ombudsman John Price said last summer’s natural disasters placed an unprecedented demand on insurers and consumers.

The inquiry members questioned Mr Price over the need to advertise the dispute resolution service to the wider community, as many claimants have said they didn’t know it existed. But he said it’s insurers’ responsibility to inform their customers.

“If [the insurer] maintains their decision [not to pay a claim], they have to inform people of the presence of FOS and how to access the service,” he said.

“There has been some complaint about insurers not doing that, [but] we have not seen that in any correspondence.”

Mr Price raised concerns over some complaints not being brought to FOS because claimants are also considering future class action litigation.

“What we are finding is that we have very, very few referrals to FOS from major plaintiff law firms,” he said. “They know us, they know where we are, and they know that it’s a free process.

“I don’t know what they are doing with the people that have seen them. We don’t know. So I think that there is a real problem.”

Australian Securities and Investments Commission (ASIC) officers also appeared before the inquiry last week, saying insurance companies are aware of the need to respond quickly to claims during time of natural disasters.

They also agreed there is room to introduce new regulatory frameworks to institute a time limit for insurers to respond to claims after a natural disaster.

The inquiry continues this week in Ipswich, Toowoomba and Innisfail.