ASIC adds claims handling to enforcement priority list

2 December 2023

The Australian Securities and Investments Commission (ASIC) will take steps in 2024 to ensure large financial service providers (general insurers) do the right thing.

For consumers who need to claim on their insurance policy, timely and fair claims handling is crucial. This means insurers cannot unreasonably delay a claim.

Equally, the insurer must not delay a claim because of claims handling, poor communication and record keeping, and inappropriate use of exclusions under the policy.

Insurance Fulfilment Providers (IFPs) are an insurer’s representative by law, providing claims handling and settlement services on an insurer’s behalf (e.g. a body repairer engaged by an insurer to repair cars under the insurer’s liability to the insured, but who does not have authority to reject claims).

Those involved in the claims handling process should know that, in 2024, ASIC will turn its attention to failures in insurance claims handling. Ensure next year not to cause any delay in the claims handling process (that includes from the time the vehicle arrives in a shop to the time it leaves).

Insurers are not perfect at this. They need to improve their claims handling services. Equally, so does the industry.

Here are a few tips to stay efficient, irrespective of how good or bad are the insurer’s current claim handling processes:

  • Ensure to send estimates to an insurer as soon as practicable. If you can’t write an estimate promptly, then release the vehicle and do not stockpile as it may be viewed as delaying the claims handling process.
  • Follow up insurers within two-to-three business days of sending the estimate. If you have not heard from them, send a quick email following up the assessment, but do not stay on hold for two hours waiting for the insurer. Also ask the customer to follow up their insurer.
  • Book vehicles in as soon as possible. If making bookings months ahead, ensure that is what the customer wants and the insurer also knows the ‘book in date for repairs’ versus when the vehicle was authorised is months apart.
  • Do not make a customer wait excessively to have an estimate completed and sent to their insurer. If you cannot fit in any more work, release the vehicle, or ensure the customer is aware of the time delay and that the insurer is happy with you booking in the vehicle months away.

Do not become the reason for delaying a claim or claim/s. When the insurer sends an authority to repair, they must ensure the vehicle is repaired and returned to the customer. As an AFS licensee, the insurer is obliged under section 912A(1)(a) of the Corporations Act 2001, to do all things necessary to ensure the financial services are provided efficiently, honestly, and fairly.

The insurer should sufficiently oversee IFPs and other service providers acting on the insurer’s behalf to ensure they do not cause delays, as stated under the Corporations Act 2001. This includes responding to complaints about the quality and timeliness of work they perform, as stated under the Corporations Act 2001. Therefore, insurers need to correct their own failings with overall claims handling and processing/assessing issues, like how a repairer must provide an efficient and timely service to the customer.

If you believe a financial firm is delaying a claim because of claims handling, poor communication and record keeping, and inappropriate use of exclusions under the policy, inform ASIC.

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