The Australian Consumers Insurance Lobby Inc (ACIL) is calling for systemic changes in how general insurers manage independent experts and settle claims, warning that failure to act could lead to a push for government-appointed assessors who advocate for policyholders.
The warning follows a review by the Australian Securities and Investments Commission (ASIC), which found that many insurers still lack adequate oversight mechanisms for third-party experts and fail to clearly communicate settlement processes to customers.
According to ASIC’s review, insurers have made some progress in supervising builders and repairers but continue to struggle with managing specialists like engineers and hydrologists. In many instances, insurers rely on claims staff without the technical background to identify flaws in expert assessments.
ASIC also found that expert reports, once used to make a decision, are rarely revisited – creating potential for uncorrected errors that can affect outcomes.
Tyrone Shandiman, chair of ACIL, said these findings are consistent with concerns raised by advocates working with policyholders.
“We work closely with claims advocates at the coal face who are still seeing an alarming volume of biased and poor-quality expert reports,” he said. “The problem is systemic and deeply rooted in the way insurers engage, oversee, and influence the experts they appoint.”
An Expert Report Standard introduced by the industry in 2024 was intended to bring consistency to report quality. However, ACIL claimed it lacks enforceability.
“One of the greatest travesties is that the standard does not impose obligations on experts directly. Instead, it relies on insurers to ensure experts act properly. That’s like asking the fox to guard the henhouse,” Shandiman said.
In addition to expert oversight, ASIC criticised how insurers explain cash settlement options.
While insurers are legally required to provide a fact sheet outlining these choices, the review found that some offer minimal guidance, particularly on how to request a reassessment.
ASIC Commissioner Alan Kirkland noted that clear and accessible communication is essential.
“Insurers by law must provide a cash settlement fact sheet, which outlines options for settlement to customers who have made a claim. Those options should be explained in terms the customer can understand, rather than pointing to complex product disclosure statements,” he said.
Some insurers have implemented post-settlement follow-ups to check on repair progress, but such practices are not yet standard across the industry.
ACIL is raising broader concerns with the Insurance Council of Australia (ICA), including allegations of insurer interference in expert assessments, use of incentive structures that may bias outcomes, failure to apply building codes, and financial barriers to challenging decisions.
Shandiman said that in some cases, policyholders who obtain a second opinion find that insurers simply commission another report to maintain a majority view.
“Consumers deserve confidence in the experts who decide the fate of their claims. If the industry cannot deliver that, then the model must change – because right now, it’s failing the people it claims to serve,” he said.
Other practices flagged by ACIL include undisclosed relationships between insurers and various claims service providers and pressure on customers to undertake unnecessary maintenance work.
Consumer groups such as Financial Rights Legal Centre and Financial Counselling Australia have also voiced concerns, pointing to continued challenges for vulnerable claimants.
“Unfortunately, ASIC’s findings do not evidence a sector stepping up to meet the moment. While there may be some improvements here and there, the overall picture is just not good enough. ASIC’s review should be a wake-up call for insurers who seem to be asleep at the wheel,” said Drew MacRae of the Financial Rights Legal Centre.
