Insurers treating claimants as ‘criminals’: watchdog

Watchdog blasts some insurers’ investigation practices.

insurers blasted

You buy insurance as a safeguard and probably hope you will never need it. But if you do need to make a claim, no one wants to be treated as a criminal.

The Australian Securities and Investments Commission (ASIC) has blasted “harmful” and “hostile” claims investigation practices by a number of insurers.

The regulator said that some claim investigations were causing significant consumer harm, eroding trust in insurance and were lacking fair process.

“Consumers expect a fair process to be followed when a claim is investigated,” ASIC said. “Consumers in our research whose claims were investigated and eventually paid felt angry, frustrated, confused, overwhelmed and helpless during investigations.

“Some consumers experienced difficulty contacting their insurer, hostile interviews, onerous information requests and inadequate support.”

ASIC was investigating complaints relating to car insurance claims following recommendations made by the financial services royal commission.

In its report, Roadblocks and roundabouts: A review of car insurance claim investigations, it said investigators targeted “mostly valid claims” and that data revealed only four per cent of all claims investigated were declined due to fraud. In all, 71 per cent were paid, 15 per cent withdrawn and 10 per cent declined for some other reason. Further, of the 1.6 million claims made in the 12-month period from September 2016, only 4.85 per cent were investigated.

ASIC said that investigation standards in the General Insurance Code of Practice that were proposed by the Insurance Council of Australia (ICA) did not go far enough and is demanding further improvements.

ASIC listed the following faults with the system:

  • some consumers weren’t notified that an investigation had started, received limited information about what they could expect from an investigation, and had difficulty getting information about how their claim was progressing
  • 25 per cent of claims took two months to finalise and only some insurers provided a hire car for a few weeks
  • some consumers were declined further insurance even though their claim was found to be valid and paid, making it difficult to get further insurance
  • investigators made them feel like criminals.

ASIC reviewed Allianz, IAG, Auto and General, Suncorp’s consolidated AAI subsidiary and Youi for its report.

It found 21 per cent of Auto and General’s paid and investigated claims took more than four months to resolve, 10 per cent of IAG’s took more than four months and four per cent of Allianz’s claims that were eventually paid took more than four months to resolve. Only two per cent of Suncorp’s paid and investigated claims took more than four months.

ICA spokesman Campbell Fuller told insuranceNEWS.com.au: “Insurers believe most investigations are conducted fairly and transparently, but ICA acknowledges a small number of consumers should have received better customer service.”

The Financial Rights Legal Centre says the industry should act immediately and rein in its investigators.

“We regularly hear from consumers subjected to threats, bullying behaviour and harassment by unregulated insurance investigators,” said casework director Alexandra Kelly.

“Consumers endure incredibly long interviews – sometimes over five hours – routinely describe being treated like criminals, and many with poor English skills are not given access to appropriate translators.

“We have been waiting now for a new set of standards for almost three years.

“The general insurance industry needs to introduce a strong and comprehensive set of best practice standards for insurance investigations to restore trust and confidence in the insurance industry.”

ASIC commissioner Sean Hughes said insurers were putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims are ultimately paid.

“When it comes to insurance, consumers should expect and do deserve better. Consumers deserve a fair process for investigated claims. Insurers must live up to the promise to pay on the policy where the claim is a genuine one," Mr Hughes said.

Consumers who are unhappy with how their claim is being handled are encouraged to contact their insurer’s internal dispute resolution team.

If they are unhappy with their insurer’s response, they should complain to the Australian Financial Complaints Authority.

Have you ever had issues making a car insurance claim? Or any other insurance claim? Did you complain to the relevant authority?

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    COMMENTS

    To make a comment, please register or login
    Tood
    9th Jul 2019
    10:38am
    The insurance industry should be next in line for a royal commission
    CoogeeGuy
    9th Jul 2019
    11:03am
    I think local councils would be on par with insurance companies needing a royal Commission
    TREBOR
    9th Jul 2019
    11:22am
    How true - comfortably established in their fat chairs and their fat salaries and viewing their peasants approaching with caps off and tuggingforlocks to get an answeer...

    Not quite as bad as that - the FPH staff are all right - it's the reality of the fat salaries and super etc for buggar-all.

    How in hell is a 'mayor' (part-time, casual, occasional) worth what they are paid?
    TREBOR
    9th Jul 2019
    11:22am
    Front Of House - not FPH
    Arvo
    9th Jul 2019
    8:00pm
    Name and shame those insurers!!!!
    Ted Wards
    9th Jul 2019
    11:03am
    Who monitors the Financial Complaints authority and the time they take to respond, let alone investigate. The system of insurance is a rip off. They are quick to take your money and very slow to react, if at all.
    floss
    9th Jul 2019
    11:14am
    Lets have a Royal Commission into the how the whole country is being run under the most corrupt Government we have ever had.
    Anonymous
    9th Jul 2019
    11:37am
    What a loser you are Floss you had your chance a month ago but the idiots you put up from the Bogan party failed when the shadow treasurer tells you not to vote for his party why would you get over it. The dickhead you have in at the moment Albanese is as big a fool.
    Old Geezer
    9th Jul 2019
    12:10pm
    Looks to me like we dodged a bullet then Floss.
    Polly Esther
    9th Jul 2019
    1:04pm
    we were all entitled to our say by vote floss; instead of being a spoiled sport and a sh*t stirrer why not accept the majority decision and cop it sweet and get on with it?
    KSS
    9th Jul 2019
    1:35pm
    Floss you do know that insurance companies are private enterpises not Government departments right?
    TREBOR
    9th Jul 2019
    11:20am
    The Rainmaker - automatically reject all claims several times....
    travelman
    9th Jul 2019
    11:22am
    We have, on many products a system of quality such as a number of stars one star bad, 6 stars excellent. Having a Royal Commission is costly and what I see about this country is we would need a Royal Commission on this government and from there just about everything underneath. It would take years to do and send our country broke - just over a number of dishonest 'scum bags', YES, 'SCUM BAGS'. what we need is an independent organisation to investigate and then record good and bad with some symbol level in the public arena for all to see. A kind of shaming. Anybody got a good suitable symbol for insurance companies?
    mudGecko
    9th Jul 2019
    3:37pm
    How about a 1-5 range of Turd icons. Or Thieves, black eye masks and all?
    Intellego
    9th Jul 2019
    11:23am
    Insurance is a scam, pure and simple.
    musicveg
    15th Jul 2019
    11:17pm
    Yes but I am too scared to not have car insurance, because the costs involved if you do have an accident with you at fault can be horrendous.
    pedro the swift
    9th Jul 2019
    11:34am
    You all need to remember that insurance is a business run for profit nothing else! Lower payouts means more profits. That the way it all works. They are not there to help you in any way if they can get out of a payout/
    Karl Marx
    9th Jul 2019
    11:48am
    Just another example of how self regulation DOES NOT work same as the banks, health funds etc.
    The government needs to take control to ensure a fair & equitable playing field.
    No policy holder, customer should be treated like a criminal. If the insurance company suspect abnormality in a claim then investigate professionally & if criminal activity is suspect then it's the job of the police to further investigate.
    Some of these insurance companies are bigger thugs than the CMFEU & John Setka
    Tanker
    9th Jul 2019
    2:14pm
    Why bring in the CMFEU? They are paid by their members to represent them in a very tough industry. Too many builders go broke on Friday which cancels all their debts, including employees entitlements, and start up again under a different name a weeks or so later. What protection is the government giving the people who were robbed of their entitlements?
    Unions like the CMFEU have to be tough given the people they have to deal with whereas in a perfect world they wouldn't have to be that way because everyone would be honest.
    Tanker
    9th Jul 2019
    2:14pm
    Why bring in the CMFEU? They are paid by their members to represent them in a very tough industry. Too many builders go broke on Friday which cancels all their debts, including employees entitlements, and start up again under a different name a weeks or so later. What protection is the government giving the people who were robbed of their entitlements?
    Unions like the CMFEU have to be tough given the people they have to deal with whereas in a perfect world they wouldn't have to be that way because everyone would be honest.
    aussiehero
    9th Jul 2019
    12:00pm
    Some years ago now my son was playing with our Wii machine. The controller slipped out of his hand, hit and smashed our NEC TV which cost us over %3000 because it had all the bells and whistles.
    I claimed from Youi under the 'Impact" clause and they denied the claim, saying that that clause was designed for protection against pieces falling from aircraft and hitting our house. I appealed, and was again denied. I appealed to Ombudsman and won the case.

    By this time years had passed and technology had moved on, NEC was no longer around and a similar type of TV could now be bought for $499. As I had a %500 excess they again denied the claim. I was beaten.
    Old Geezer
    9th Jul 2019
    12:11pm
    Never had an issue with any insurance and found they couldn't do enough for me in my time of need. Insurance sure make things so much less stressful.
    Cat
    9th Jul 2019
    1:56pm
    You're lucky. I had the same insurer for 35 years for all my insurance. Came to make a no fault mv claim- someone ran up the back of me waiting while giving way at a t junction -all they had to do was claim off the other parties insurer but they totally abdicated, refused to pay to fix my car and left me with no car. The fact i was with them for 35 years and was a rating 1 driver meant nothing to them. The fact i was injured meant nothing either - they refused to help me with that either just left me injured with no help and no car.
    Old Geezer
    9th Jul 2019
    3:09pm
    My insurance company even drove a rental car out to me at the scene of the accident so I wasn't inconvenienced.
    Golden Oldie
    9th Jul 2019
    3:36pm
    My insurer provided a taxi to and from a car hire service when I had to have my car repaired after an accident. Very helpful, and paid for a hire car for 2 weeks when my car was stolen.
    Lookfar
    9th Jul 2019
    3:59pm
    Hey OG, you remind me of Kurt Vonnegut, an American novelist, who experienced a life of suffering, - He wanted the inscription on his Tombstone to read, "Everything was Beautiful and Nothing Hurt..
    Old Geezer
    10th Jul 2019
    10:50am
    Well everything is beautiful and nothing hurts so he is dead right. Most people just see the bad side of things I see the opportunities instead.
    Farside
    11th Jul 2019
    11:09am
    My experience with vehicle insurers echoes OG. I guess it is a checking your insurer has a good reputation for service and claims. Price isn't everything when life goes pear-shaped and you want your insurer to stump up to its side of the bargain.
    musicveg
    15th Jul 2019
    11:19pm
    Please tell us which car insurer who are with, hard to find reviews online.
    Not a Bludger
    9th Jul 2019
    12:20pm
    Looks to me like another case of ASIC trying to out-macho ACCC in their ongoing bout to see who can present as the toughest.
    This after years of both failing to land a decent glove on anybody.
    TREBOR
    9th Jul 2019
    4:46pm
    Competition, innit? Guaranteed to improve performance.....
    shirboy
    9th Jul 2019
    1:36pm
    A few years ago I lodged a claim with Budget Direct who are really QBE for a new pool pumping system & my Poolman said they were the nicest company he had ever been involved with.
    Farside
    11th Jul 2019
    11:11am
    did not know Budget Direct were QBE, however my experience with QBE has been excellent.
    musicveg
    15th Jul 2019
    11:20pm
    I thought they were owned by Holland the South African company?
    KSS
    9th Jul 2019
    1:46pm
    I have no problem with claims being investigated at all. Who doesn't know someone who has exaggerated the worth of the item/s being claimed?

    However, the investigations should be conducted professionally and promptly and resolved as quickly as possible. Where investigations take longer the claimant should be kept informed why it is so.

    People also have a responsibility to know exactly what they are and aren't covered for and in what circumstances. e.g. car insurance is negated if you have drugs or alcohol in your system at the time of the accident, or having left a window open or door unlocked when the car is parked (even at a petrol station) if you are more than a couple of metres away (paying for example) etc etc.

    And don't forget the more that is paid out in claims, the higher the premium the next year - and that is NOT all about profit to shareholders, its about having the funds to pay the next lot of claims!
    sunnyOz
    9th Jul 2019
    2:23pm
    And the worst insurers are those who say they represent 'pensioners or seniors'. Without hesitation, or exception, I have yet to find one quote cheaper than other companies. Poor seniors think 'oh, they must have the best rate because they say they are for pensioners'. Absolute rubbish! When I got a new car last year, a 'seniors' insurer was actually almost double the price I got elsewhere. My elderly aunt fell for this for years, thinking that loyalty would be rewarded. What a mistake that was!
    Old Geezer
    9th Jul 2019
    3:11pm
    Agree if they have senior or pensioner in their name then you pay a premium over other insurers.

    Also check what you insurance company is offering new customers. Lost count of the number of times I have rang and got the new customer rate or online rate as it was cheaper.
    musicveg
    15th Jul 2019
    11:21pm
    I just changed my mum's car insurance to Seniors and they were half the cost for the same cover as what she was paying before.
    Mez
    24th Jul 2019
    12:19pm
    I have noticed that by shopping around!
    The Bronze Anzac
    9th Jul 2019
    3:59pm
    Insurance Companies are in my Top 10 list of Great Australian Thieves. The others are Telcos, Second Hand Auto Dealers, Politicians, Banks, Lawyers, Real Estate Agents, Religious Food Certification Companies, Energy Retailers & Tax Evaders. What have I missed ?
    Mez
    24th Jul 2019
    12:17pm
    Ha ha!
    Lookfar
    9th Jul 2019
    4:07pm
    The situation is, most big companies have a Sales department and a Claims department, both of which are rewarded by their companies for the amount of money they earn for the company,- and it's shareholders..
    ASIC would be more effective if they required the person who made the sale, (to you of your purchase, insurance whatever,) to have to deal with the complaints personally, - I suspect you would find a vast difference in both departments henceforth!
    Eddy
    9th Jul 2019
    5:02pm
    I can truly say I have no complaints about the various insurance companies I deal with. Then few claims I have made on my motor insurance were settled promptly and satisfactorily. Similarly with my home and contents insurance. One of my claims was water damage caused by a plumbing failure where the water soaked a carpet and also entered my ducted heating. The insurance replaced water damaged carpet and my ducted heating unit, actually recalling the contractor when their inspector was not satisfied with some aspects of the repair. The only time insurance was difficult was Workcover (a government run organisation), my wife was injured at work (she was a nurse who was attacked by a patient about 3 times her weight) injuring, amongst other things, her spine. Our neighbours alerted us to the private investigators watching our house and called the Police. She eventually returned to work and was awarded a small sum as compensation for pain and suffering.
    Mez
    24th Jul 2019
    12:14pm
    Work Cover is government run as you say BUT they have to employ insurance companies like Allianz to do the investigation by private investigators and each year or after a few months they change them over. It is these insurance companies that apparently put a lot of pressure upon the investigators whom apparently do not stay working long for these insurance companies due to the stresses endured!
    NOT A HAPPY PLACE!
    sybilla
    14th Jul 2019
    2:00pm
    When my 8 y.o Honda was graffitied my insurance company stated that they would pay only half the cost a complete restoration. Their reason: "You park for long periods in blazing tropical sun so this car's surface was already 50% damaged at the time of the claim."
    My reply: "I'll accept a restoration to the state the surface was in just before the graffiti occurred." Within a month the company agreed to pay for a complete respray. BTW the care had been insured since it was new.
    musicveg
    15th Jul 2019
    11:16pm
    What type of insurance are they talking about? I just recently changed my car insurance to Allianz because they were cheaper, but it is hard to find reviews online that are honest and most are only about customer service and signing up not actually claiming. So what do you do to find the best insurer?
    Mez
    24th Jul 2019
    11:56am
    Ask around!
    jonboy
    17th Jul 2019
    6:39pm
    As usual the Insurance Comapnies excelled themselves in Townnsville recently by REJECTING most of the flood claims as 'They were caused by water coming UP. not Down' so where else is FLODWATER gunna go in a BAD flooding storm !!!!!
    Mez
    24th Jul 2019
    11:52am
    Allianz certainly have a record of being very difficult to claim with and this also includes for those claiming Work Cover when people are sometimes feeling very traumatised from workplace bullying and are suffering from anxiety and depression as a result.
    People are also known to have suicides as a result of the insurance investigators giving these claimants a very hard time starting with them saying that they have not received the faxed medical certificates faxed from the medical clinic NUMEROUS TIMES!
    Mez
    24th Jul 2019
    11:55am
    However there are good ones like AAMI and Budget and RACV, however!
    musicveg
    24th Jul 2019
    2:28pm
    Now you tell me about Allianz, hopefully I won't have to claim and will change when it is due next time, I was with RACV but they have just as many bad reviews online too and were much more expensive, AAMI and Budget are the same. The other thing I looked at was where their call centers are and many are South African. Not too mention who owns the companies.
    Lookfar
    26th Jul 2019
    12:42pm
    It's a risk, but I have found over many years that if I put aside the money demanded by the insurance company, - not including the first claim bonus losing or the first $500. etc, I am way ahead.
    Unfortunately I have rarely had that money to put aside, but still am well ahead, unless my 110 year old wooden house burns down, then I will be in deep whatsit, so am very careful, - very very careful, - That is it really, be very very careful and you will be very very unlikely to require insurance