The Australian insurance industry continues to face difficulties in meeting claims handling timeframes, according to the recent General Insurance Code Governance Committee (CGC) Annual Data and Compliance Report for 2022-23.
The report highlighted over 45,000 breaches related to claims handling, reflecting a 16% increase compared to the prior year.
CGC chair Veronique Ingram acknowledged that insurers had to manage an increased volume of claims but emphasised the importance of handling timeframes.
“We know that insurers were dealing with greater volumes of claims but claims handling timeframes are crucial for customer wellbeing. It is troubling that we saw such significant numbers of breaches in this reporting period,” she said. “The issues appear to stem from insufficient resourcing, training, and technology investment by insurers, and they must do more to address these. Ultimately, addressing these underlying issues will lead to better outcomes for customers.”
The report showed that a small group of insurers accounted for most breaches, while others managed to reduce claims handling-related breaches.
“We welcome the positive steps, and we know that some insurers have worked hard on reducing breaches in this area following reports in recent years from Deloitte, ASIC, and the CGC,” Ingram said. “We encourage all insurers to continue reviewing and enhancing claims handling procedures and customer communications.”
The report observed a 61% increase in complaints, marking the fourth consecutive year of growth.
“The increase this year can be attributed in part to an expanded definition of complaint, but we have seen these numbers go up for several years now, which is a worry,” Ingram said. “It is a consequence of the increase in claims-handling breaches. As we see the breaches go up, we see more complaints come in.
“Insurers should be analysing their complaints data to pinpoint areas for improvement, particularly regarding claims handling and communication delays.”
The report urges insurers to resource their complaints handling functions adequately and invest in technology to streamline and enhance processes.
Ingram said the CGC is committed to working with insurers to address areas of concern, while warning that persistent non-compliance could result in sanctions.
“We have seen encouraging signs of progress in the latest reporting period, and we expect insurers to consolidate these gains in the coming year,” she said.
Public consultation has recently opened to ensure the General Insurance Code of Practice continues to meet the changing needs of consumers by setting key service standards that the sector must adhere to.
