The Australian Securities and Investments Commission (ASIC) will review how insurers are handling customer complaints and responding to recommendations from previous reviews about claims handling processes following the 2022 floods that hit much of Australia’s east coast.
As premiums have surged for car and home insurance, Australia’s corporate watchdog said that it would continue to scrutinise the sector in its new corporate plan, which it published Thursday (Aug 22).
A parliamentary committee inquiry into insurers’ response to the flooding that devastated large parts of Queensland, New South Wales and Victoria is set to produce its report in October, after hearings where insurers were grilled on shortcomings in claims handling and policyholders aired their grievances. Another Australian Senate committee inquiry, set up in May, will also look into climate risk and how it has affected insurance affordability.
ASIC has set its sights on ‘acting against insurance misconduct’, which it has listed as one of its strategic priorities. The watchdog will take action in response to harmful product design and distribution practices, including conduct that result in consumers receiving unsuitable products in relation to life insurance, it said.
A preliminary data snapshot from the Australian Financial Complaints Authority (AFCA) showed that general insurance complaints rose 4% from 2023 to 2024, after a 50% jump from 2022 to 2023.
These numbers were driven by a surge in complaints about comprehensive motor vehicle insurance. A 21% increase in complaints about motor put it ahead of complaints about home insurance, the AFCA said.
Delays in claim handling accounted for a third of motor vehicle complaints this year, added the AFCA, with claim delays remaining the top issue for general insurance.
ASIC also said that it will continue to review direct sales of life products, with a focus on low-value products, and produce a report on its findings. The watchdog will engage with insurers conducting direct sales of life insurance and produce a short report, it added.
Australia’s corporate watchdog added that it will also examine how insurers have responded to policyholders in the context of climate change, responding to recommendations from previous reviews regarding claims handling following severe weather events.
Over AU$2.2bn in extreme weather claims were paid out by insurers in 2023 and 2024, said the Insurance Council of Australia (ICA) in a report published on Monday (Aug 19).
Almost 157,000 disaster-related claims were lodged from four declared insurance events over the past year, the ICA said, with nearly AU$20bn paid out in natural disaster claims from 14 declared catastrophes and seven significant events in the last five years.
The council said that it had conducted 35 in-person consultations and townhalls in conjunction with AFCA since July last year to assist policyholders about insurance complaints processes.
It will also set up an Industry Event Response Charter and Playbook that will outline how the general insurance industry will prioritise, plan and deliver a response to future nat cats.
