CGC Thematic Inquiry into Better Claims Decisions

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The General Insurance Code Governance Committee (CGC) has just released a report, Thematic Inquiry into Making Better Claims Decisions, analysing instances from six insurance providers (who subscribe to the General Insurance Code of Practice) where initially denied claims were later accepted after an Internal Dispute Resolution (IDR) process.

From the CGC media release: “Over half of the sample claim files provided by participating insurers were overturns of claims that were originally denied based on wear and tear or maintenance exclusions. This provided us with insights about the way that insurers are applying these exclusions. We have therefore also made some recommendations to help insurers improve in this area.”

The recommendations centre on ensuring training of staff and experts, standardised approaches, clearer communication with consumers about insurance and expert reasoning, and data collection, analysis, and application to better insurer insight, practices, and Code compliance. The issue of ‘wear and tear’ also became an incidental but significant focus of the report, highlighting the need for greater care and standardisation in claims where ‘wear and tear’ is raised against the claim.

The report is released in the same week that the Federal Government has announced an inquiry to insurance responses to the 2022 floods, and its introduction highlights the major role insurance responses have in consumer recovery, and stresses the importance of this consideration in light of natural and environmental disasters.

Though the report is narrow in its focus, it nevertheless provides insight into the importance of IDR and areas for improvement in the insurance industry that would benefit both companies and consumers.

For future considerations, I will leave you with this quote from the Chair’s Message:

“Data provided by the six subscribers that participated in the inquiry shows that in
2021-22, a quarter of denied home claims proceeded through to IDR. This worked
out to be nearly 11,000 complaints.
And, alarmingly, nearly half of these were later overturned in favour of the
consumer. This is a significant overturn rate and raises questions about the quality of
the decision-making by subscribers. They must get on top of this.”

Thematic Inquiry into Making Better Claims Decisions, Chair’s Message, p5

For more information please see the CGC media release or the report itself.