The General Insurance Code Governance Committee (CGC) is calling for improvements to the Australian general insurance code of practice following the concerning number of code breaches in 2021-22.
CGC’s latest annual data report revealed that code breaches totalled 58,104 in 2021-22, a 40% increase from the previous year.
“Insurers should be able to provide clients with updates in a timely manner. These are long-standing obligations that should be standard in all processes that insurers have for handling claims. We should not be seeing breaches of this nature in such large numbers – insurers must make the effort to get on top of these,” said Veronique Ingram, chair of the of the CGC.
The annual data report revealed that 22 insurance companies reported a total of 116 significant breaches in 2021-22, up from only 57 in 2020-21. The breaches affected over 1.7 million consumers and resulted in remediation payments of over $52 million.
Most code breaches in 2021-22 were related to updating people about their claims within set timeframes.
Ingram expressed her disappointment in the record number of breaches of the code in 2021-22 while acknowledging the difficulties insurers faced over the years.
“Seeing breaches rise close to 60,000 is disappointing for us and should be disappointing for all in the industry, too,” she said. “We know that there were challenges across the year, with the floods in Queensland and New South Wales causing an increase in claims and putting pressure on insurers, but we’ve seen breaches rise now for five years. And claims-handling is always the source of most breaches.”
With 24,983 breaches attributed to staff not following processes and procedures, the CGC emphasised the need for insurers to improve.
“Insurers must recognise that good systems and processes, properly integrated, will help to prevent or mitigate mistakes in the busy times, the times of high pressure. It is crucial that all insurers look at their current systems and processes and identify areas that aren’t working as well as they could. It is time to reverse the trend and see improvements that will bring down breaches in the next 12 months,” Ingram said.
