REP 621 Roadblocks and roundabouts: A review of car insurance claim investigations
Released 4 July 2019
ASIC reviewed how general insurers investigate comprehensive car insurance claims where fraud is suspected. We found that insurers are investigating some claims in ways that are causing significant consumer harm, eroding trust in insurance and without fair process.
Fraud is a real and serious issue and insurers need to investigate, identify and deny fraudulent claims. But our data shows that of all the claims that insurers decided to investigate, only 4% were declined for fraud, and only 10% were declined for some other reason. Over 70% of the claims that insurers investigated were paid.
Consumers expect a fair process to be followed when a claim is investigated. Consumers in our research whose claims were investigated and eventually paid felt angry, frustrated, confused, overwhelmed and helpless during investigations. Some consumers experienced difficulty contacting their insurer, hostile interviews, onerous information requests and inadequate support.
ASIC has been engaging with the Insurance Council of Australia (ICA) to improve industry standards, which has led to a proposal by the ICA for additional standards in the General Insurance Code of Practice (Code). We found that further improvements are necessary.
Our review considered aggregated data on 1.6 million claims from September 2016 to September 2017, consumer research with 52 consumers whose claims were both investigated and paid, and a review of insurers’ investigation policies and procedures. The insurers we reviewed are Allianz Australia Insurance Limited (Allianz), Auto & General Services Pty Ltd (A&G), Insurance Australia Group Limited (IAG), AAI Limited (Suncorp), and Youi Pty Ltd (Youi).