Allianz Australia hit with penalties over flood claim failures

Insurers reminded to rigorously review relevant information when handling claims

Allianz Australia hit with penalties over flood claim failures

Insurance News

By Roxanne Libatique

The General Insurance Code Governance Committee (CGC) has penalised Allianz Australia Insurance Limited after probing claims from the February 2022 NSW and Southeast Queensland floods (CAT221).

The CGC launched the investigation due to concerns over Allianz’s compliance with the General Insurance Code of Practice.

GCG investigates CAT221 claims

During the investigation, Allianz reviewed 47 claims associated with CAT221 and discovered inconsistencies in five previously declined claims, which led to their acceptance.

The CGC emphasised that insurers must carefully consider all pertinent information before making claim decisions and maintain robust quality assurance processes when using external expert reports.

The investigation revealed significant breaches due to Allianz’s failure to identify clear inconsistencies in expert reports and implement effective controls.

Sanctions imposed

The CGC imposed the following sanctions on Allianz:

  •  a $50,000 community payment to a registered charity
  • a requirement to publish details of the determination and sanction on its website

Allianz has since paid $216,807.44 for the overturned claims and enhanced its claims-handling processes.

The CGC encourages insurers to review and bolster their systems, processes, and quality controls to ensure fair and consistent claim decisions, particularly during catastrophic events.

Allianz’s response to CGC’s findings

Allianz has acknowledged the CGC’s findings and decision.

“Allianz acknowledges the General Insurance Code Governance Committee’s (CGC) determination CX17036. Following the review of one claim out of the over 31,000 claims we received arising from the February/March 2022 NSW and SE Qld floods, Allianz reviewed a further 46 flood claims. As a result of these reviews, a commercial decision was made to make further payments totalling $217,000 across five claims,” it said.

“At Allianz, we are committed to ensuring that our customers are supported and protected, especially in challenging times such as when making flood-related claims,” the insurer said.

The company is collaborating with the CGC, the Australian Financial Complaints Authority, and the Insurance Council of Australia to address the broader industry implications and the practical implementation of the CGC’s findings, particularly regarding hydrology reports.

It also announced that it will include flood cover as standard in its householder policies, removing the need for hydrology reports when assessing flood-related home claims.

“This change reflects our dedication to simplifying the claims experience, improving our customers’ understanding of their insurance cover and providing support to our customers in their time of need,” the insurer said.

Allianz SE recently reported a 6.8% increase in its operating profit, hitting €4 billion, compared to €3.7 billion in the same period the previous year.

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