Australian insurers have come under fire for the way they’re handling suspected fraudulent claims for car insurance. In a recent investigation by the Australian Securities and Investments Commission (ASIC), insurers were slammed for their heavy-handed, “lengthy and confusing” processes, which sometimes involve prying through social media accounts and interrogating customers in their homes for hours on end.
In a report published on Thursday, the corporate watchdog found that despite some companies’ over-zealous investigations, very few claims are actually found to be fraudulent. In fact, over 70% of investigated claims are found to be valid and then paid, compared to only 4% of claims being declined due to fraud.
As the Sydney Morning Herald reports, ASIC found poor practices by insurance companies, including: subjecting those suspected to excessively long or successive interviews that often felt like interrogations; openly accusing consumers of submitting fraudulent claims; and wearing people down with onerous, unexplained and successive information requests.
The report, which reviews some big insurance names like Allianz, A&G, IAG, AAI Limited and Youi, states: “ASIC’s research raises concerns that consumers are being worn down by a lengthy and confusing process.” This was confirmed by ASIC Commissioner Sean Hughes, who said: “We found insurers are putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims are ultimately paid.”
Following the report’s release on Thursday, numerous parties have released commentary. The Sydney Morning Herald reports Alexandra Kelly, the director of casework at the Financial Rights Legal Centre, saying ASIC’s report “confirms the experiences that our clients tell us on our Insurance Law Service line”.
Kelly said: “We regularly hear from consumers subjected to threats, bullying behaviour and harassment by unregulated insurance investigators. 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.”
The Insurance Council of Australia (ICA) has also acknowledged the report, stating that while most investigations are conducted fairly, some customers should have received better service. The ICA will include new investigation standards when it updates its General Insurance Code of Practice at the end of the year.