Insurers record an increase in significant breaches of the Code of Practice

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A substantial increase in significant breaches of the General Insurance Code of Practice points to a concerning trend among insurers, according to the Annual Report of the General Insurance Code Governance Committee (GICGC) published today.

The 2021-22 Annual Report highlights the increase in significant breaches, noting that a large number were related to customers being overcharged and other pricing errors.

It mentions that insurers continue to record significant breaches in areas of the Code related to honest, efficient, fair, transparent and timely dealings with customers.

Chair of the GICGC, Veronique Ingram, stated that the jump in significant breaches was concerning.

“The rise in significant breaches of Code sections covering the sales process or buying insurance is concerning,” Ms Ingram said.

“In many cases, insurers have been breaking pricing promises for years. Overcharging premiums is harmful to consumers and insurers should be doing more to prevent this.

“The onus lies with the insurers because these types of errors are not easily identified by customers.”

The Annual Report states that the significant breaches related to claims-handling had been exacerbated by environmental factors in 2021-22.

“We recognise that severe weather, as well as the ongoing effects of the pandemic, created challenges. This is evident in the number of significant breaches relating to claims-handling, particularly delays,” Ms Ingram said.

“Insurers faced a large volume of claims in 2021-22. And while we understand that this put pressure on the industry, insurers must recognise that delays create problems for people trying to rebuild their lives.

“We want to reiterate the importance of responsive and effective communication with claimants.

“Ensuring communication is timely and transparent is crucial during the claims-handling process. Doing this well can help claimants through a difficult time and bring down breaches of the Code.”

The GICGC Annual Report also highlighted the significant monitoring work the Committee undertook in the past year. The Committee opened 170 investigation matters and closed 243, while it published several important pieces of guidance to help insurers meet obligations.

“Our work monitoring compliance with the Code was crucial,” Ms Ingram said.

“The investigation work is vital in keeping insurers accountable. It is this work that pursues high standards of practice in the industry and ensures good outcomes for consumers.”

The Annual Report also makes note of the GICGC’s work with stakeholders, in particular ASIC, to obtain valuable insights into the practices of insurers and to work towards more efficient sharing of industry information.