Is parliamentary inquiry showing the worst of the insurance industry?

Major insurers offered apologies during last week's hearings

Is parliamentary inquiry showing the worst of the insurance industry?

Catastrophe & Flood

By Mika Pangilinan

Australia’s general insurance sector has come under intense scrutiny during a parliamentary inquiry into its handling of the floods that devastated eastern states in 2022.

The inquiry, launched by the House Standing Committee on Economics in late January, has unearthed instances of claim delays and denials. Testimonies also highlighted allegations of insurers making unreasonably low settlement offers, as well as prompting accusations of misleading conduct towards policyholders.

In one such testimony, Julia Davis, from the Financial Rights Legal Centre (FRLC), spoke about complaints regarding “appalling behaviour” from the side of insurers, including rude and aggressive behaviour by assessors, and pressure on policyholders to accept inadequate cash settlements.

Major insurers that attended hearings over the past week offered their apologies, including IAG, Suncorp, Youi and Allianz Australia.

Richard Feledy, managing director of Allianz Australia, said during his appearance on Friday that the company “let down and disappointed some of our customers.” He added that Allianz has made progress in improving its systems.

However, National politician Andrew Gee questioned the effectiveness of such apologies, highlighting a particular case where action was only taken by Allianz after direct intervention by his office.

The floods of 2022 were among the worst natural disasters in Australia’s history. In its aftermath, insurers reportedly received over 303,000 claims, totalling an estimated value of $7.4 million.

Most of these claims have been resolved, ABC reported, but a few thousand have yet to be closed.

The Australian Securities & Investments Commission (ASIC) said during the hearing that it is actively investigating claims handling and dispute resolution practices within the industry.

Since January 2022, the regulator has required insurers to provide claims handling and settling services in a manner that is efficient, honest, and fair, as per their Australian financial services licence obligations.

What are your thoughts on this story and the parliamentary inquiry in general? Feel free to share your comments below.

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