Insurance companies have been advised by the General Insurance Code of Practice Governance Committee to careful examine the decisions taken by the Australian Financial Complaints Authority (AFCA) to improve their internal complaints processes and clearly inform their consumers that any emerging disputes can be forwarded to the adjudicator.
The manner in which disputes are handled by insurers has increasingly raised concerns and attracted scrutiny as per the committee’s latest annual report, which notes that 60% of customer complaints were ruled in the insurers’ favour after stage two internal reviews.
Just about 56% of unfavourable customer outcomes were recorded when the process was taken up by the AFCA, for unknown reasons, the committee further stated in its annual report.
Unresolved Complaints To AFCA
“Subscribers’ internal complaints processes should be robust enough to encourage consumers and small businesses to refer their unresolved complains to AFCA,” it states.
The committee further notes that the AFCA has so far resolved about 77% of all complaints by mere agreement or in favour of the complainant—an obviously higher figure than the outcomes attained by insurers.
Ideally, if the processes of handling internal complaints can work more effectively, the committee would be expected to witness a higher alignment between complaints resolved by the AFCA and complaint outcomes attained by subscribers.
The report suggests that code subscribers ensures that those employees charged with the responsibility of offering effective and fair review with regards to complains are competent and duly trained.
“A critical element of this is using the outcomes of complaints from AFCA to improve these employees’ knowledge and understanding of products, claims processes, general insurance law and principles, and applicable consumer protection law.”
The Code Of Practice Breaches Climbing
As reported last week, the code of practice breaches soared to 31,186 in the last financial year compared to 13,668 the previous 12 months, while the number of cases relating to serious breaches rose in fourfold.
Apparently, the two code standards often contravened were in relation to how claims and complaints were handled by insurance companies.
According to the government committee report, it is devising a way of making inquiries into the travel insurance space given the increasing number of declined claims, and hopes to further investigate claims withdrawn within the retail categories.
The insurance industry instituted the code committee in 2017 after it was marred by damaging media reports of misconduct including the Fairfax Media series/joint Four Corners, which brought to the limelight allegations regarding misbehaviour turned into bullying, doctor shopping by insurance companies and the use of outdated medical definitions.
Insurance Industry Acting Too Slow
In March this year, the Life Code Compliance Committee released damning reports that indicated that the insurance industry had taken too long to clean up its messy acts and offenders were warned to style up or risk being named and shamed.
The committee concluded in their scathing report that many insurers “lacked robust frameworks for monitoring compliance”, and accused the industry of acting too slowly in cleaning up its acts, noting that this was “largely only occurring as a result of the review rather than the subscribers’ desire to ensure they comply with the code”.
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