The Australian Securities and Investments Commissions (ASIC) says the industry may need to reconsider its approach to handling claims as “serial” severe weather events become normal.
Vice President Karen Chester said the industry faced a “fundamental task” in its efforts to process claims related to natural disasters over the past three years and that while insurers rose to the challenge, the he increase in delays in finalizing claims worries the regulator.
“Perhaps it’s time to pause and rethink resources for claims handling and dispute resolution,” Ms Chester said in a speech to the Insurance Council of Australia’s annual conference.
“Is there a need for a structural increase in these resources, rather than a surge capacity driven by events or seasons? »
She says the regulator will write to insurance commissions shortly to share ASIC’s expectations for handling claims as summer approaches.
ASIC is conducting a review of claims management practices to establish a baseline of insurers’ conduct in relation to their mandatory obligations and compliance with the industry code of practice.
“We are focusing directly on the consumer experience, including identifying frictions in complaints handling. We expect to report our findings by mid-2023,” Ms Chester said.
The industry is facing some 234,000 claims from the $5.4 billion NSW/Queensland flood disaster earlier this year and also 21,000 claims from severe NSW storms in July.
On top of that, last month’s flood disaster in New South Wales, Victoria and northern Tasmania, as well as claims for bushfires, cyclones and floods over the past three years have revealed pressure points that need to be addressed.
“There are still outstanding claims from 2021,” Ms Chester said. “The resolution of internal and external conflicts is under pressure. We continue to see an increase in complaints received in the area of general insurance. »
She says the industry should also consider improvements in product design and communication as a way to ease the pressure of complaints.
“Consider if you can better design products to help people in high-risk communities,” she said.
“The complex challenge of improving product design for pressure here and now and in the longer term will require a collective effort from the industry.”