ICA Code slammed for complicating dispute process

ICA Code slammed for complicating dispute process | Insurance Business

ICA Code slammed for complicating dispute process
The Insurance Law Service has criticised the Insurance Council of Australia’s revised General Insurance Code of Practice for complicating the dispute process for customers and not doing enough to protect consumers.

The Code, which was revealed on Monday, has been met with praise from insurance companies however the ILS has disparaged the Code for not going far enough. ILS spokeswoman Alice Lin told Insurance Business the Code complicates the dispute process for consumers.

“Previously, consumers facing problems with the claims department would escalate their dispute to one internal disputes resolution department for complaints to be addressed,” she said.  “[This] Code divides this internal disputes resolution into a two-stage process, and it is only at the second stage that the Code requires the dispute to be reviewed by a different person with the appropriate experience/knowledge/authority.”

The ILS also takes issue with how the Code responds to repair and workmanship. Under the revised Code, where the insurer has selected and authorised a repairer, it takes responsibility for the quality of the workmanship and materials, and handles any complaint via its internal complaints process.

“The Code does generally provide for insurers to take responsibility for problems caused by their own repairers,” Lin conceded, “but it does not give consumers a framework for how complaints are to be addressed,” she said.  “The Code also does not address issues such as how many attempts the insurer gets to fix up the damage before they can no longer insist on their right to organise repairs themselves, or how long an insurer should make customers wait for the insurance company’s own repairers to become available.”

Lin also criticised the Code for not having guidelines for what is appropriate in a fraud investigation.

“The Code should set guidelines for the number of occasions and total number of hours that a person can be interviewed, and the extent of personal records like bank and telephone records should ordinarily be required during an investigation.”

In response to the ILS’s concerns, a spokeswoman for the ICA told Insurance Business that the revised General Insurance Code of Practice has been carefully drafted, in consultation with consumer advocates, and other stakeholders such as ASIC and FOS.

Addressing each of the concerns raised in turn, she explained that the drafting process took into account ASIC’s Regulatory Guide 165 that provides standards for internal and external dispute resolution.

“The revised Code is aligned with the standards set out in Regulatory Guide 165.  Section 10 of the revised Code provides a clear framework for the handling of complaints and disputes.”

She stressed that where a Code signatory has selected and directly authorised a repairer, the Code requires that the Code signatory accepts responsibility for the quality of workmanship and materials. “It must handle any complaint about the quality or timeliness of the work or conduct of the repairer as part of the Code signatory’s complaints handling process,” she continued.

However, on the subject of fraud, the spokeswoman said that it is for each insurer to decide how it conducts fraud investigations, in accordance with the law.