CGC Annual Report 2019-20: The General Insurance Code of Practice report card

CGC_2019-20_Annual Report_pdf

The General Insurance Code Governance Committee (the Committee) has today released its annual report for the 2019-20 financial year. The report includes analysis of trends and service standards in the general insurance industry in a year that included significant summer bushfires, flooding and the start of the COVID-19 pandemic.

Under the stewardship of its new Chair, Veronique Ingram PSM, and its former Chair, Lynelle Briggs AO, the Committee acknowledges that 2019-20 created significant operational challenges for the general insurance industry. The influx of complaints and enquiries also demonstrates how important general insurance has been to consumers impacted by these events and the important role of the General Insurance Code of Practice (the Code) in ensuring that consumers are treated in a fair, reasonable and ethical manner.

Code subscribers are currently undertaking substantial change programs to transition to the new 2020 Code. The six recommendations contained in the report aim to assist Code subscribers to comply with their obligations under both the outgoing and incoming Codes.

In 2019-20 Code subscribers reported 32,870 breaches of the Code to the Committee, a 5% increase on 2018-19.
Of these breaches, Code subscribers reported:

  • 16,730 breaches of Section 7 on Claims, an increase of 8%
  • 8,244 breaches of Section 10 on Complaints and Disputes, an increase of 31%
  • 3,973 breaches of Section 4 on Buying Insurance, an increase of 69%, and
  • 3,555 breaches of Section 14 on Access to Information, a decrease of 52%.

These four sections of the Code made up 99% of the breaches reported by Code subscribers to the Committee. The Committee continues to work with subscribers to ensure that breaches are identified, root causes are addressed, and that any consumer detriment is remediated.

Code subscribers also provided the Committee with an overview of their operations:

  • 43.8 million general insurance policies were sold to consumers and businesses, of which motor vehicle policies (37%) and home policies (26%) made up two-thirds
  • 4.7 million claims were lodged (up 0.2%)
  • 231,480 claims were declined (up 25%) and 366,581 claims were withdrawn (up 4%)
  • 41,608 complaints were received about general insurance services or products, an increase of 20% on the previous year. Most complaints were in relation to motor policies (38%) and home policies (32%).

A total of 112 individual significant breaches were reported by Code subscribers in 2019-20, following 119 reported in 2018-19. The main issues that led to significant breaches closely mirrored those of Code subscribers’ self-reported breaches:

  • Section 7 on Claims – 41 significant breaches
  • Section 4 on Buying Insurance – 40 significant breaches, and
  • Section 10 on Complaints and Disputes – 11 significant breaches.

The Committee has worked actively with subscribers to ensure that they have remediated significant breaches in a timely manner – especially when consumers have suffered financial detriment – and implemented corrective measures to prevent them from reoccurring.

The phased transition to the delayed 2020 Code has seen additional and expanded obligations coming into operation in July 2020 and January 2021. These important obligations provide additional protections for consumers who may be in a vulnerable situation or experiencing financial hardship. The Committee acknowledges and supported the general insurance industry’s commitment to ensuring that measures were in place to achieve the consumer outcomes intended by these provisions from July 2020.

The Committee confirmed that it will closely observe the operation of the new and expanded provisions of the 2020 Code (which will be fully operational on 1 July 2021), to keep a focus on improving consumer outcomes and ensure Code subscribers meet the objectives of the Code, in particular to maintain and promote trust and confidence in the general insurance industry.

About the General Insurance Code Governance Committee: The Committee is an independent body responsible for
monitoring Code subscribers’ compliance with standards in the General Insurance Code of Practice (the Code). As at 30 June 2020 there were 50 subscribers and a further 132 Lloyds Coverholders and Claims administrators bound by the Code – 97% of Australia’s general insurance industry. The Committee aims to help the industry provide services that meet the needs and expectations of consumers.
Further information about the Committee is available at www.insurancecode.org.au or by contacting Elizabeth McNess, Code Compliance and Operations Manager on 02 8366 8533 or [email protected].