Record breaches must prompt improvements
Insurance providers reported a record number of breaches of the General Insurance Code of Practice (the Code) in 2021-22, leading to calls for significant improvement from the Code Governance Committee.
In its latest Annual Data Report, the Code Governance Committee noted that breaches of the Code reached 58,104 for the 12-month reporting period – an increase of 40% on the previous year.
Chair of the Code Governance Committee Veronique Ingram expressed disappointment in the result while acknowledging the difficulties insurers faced over the year.
‘Seeing breaches rise close to 60,000 is disappointing for us and should be disappointing for all in the industry too,’ Ms Ingram said.
‘We know that there were challenges across the year with the floods in Queensland and New South Wales causing an increase in claims and putting pressure on insurers, but we’ve seen breaches rise now for five years. And claims-handling is always the source of most breaches.’
The Annual Data Report revealed that most breaches related to updating people about their claims within set timeframes.
‘Insurers should be able to provide clients with updates in a timely manner. These are long-standing obligations that should be standard in all processes insurers have for handling claims,’ Ms Ingram said.
‘We should not be seeing breaches of this nature in such large numbers – insurers must make the effort to get on top of these.’
With 24,983 breaches attributed to staff not following processes and procedures, the Code Governance Committee reiterated the need for insurers to improve.
‘Insurers must recognise that good systems and processes, properly integrated, will help to prevent or mitigate mistakes in the busy times, the times of high pressure,’ Ms Ingram said.
‘It is crucial that all insurers look at their current systems and processes and identify areas that aren’t working as well as they could.
‘It is time to reverse the trend and see improvements that will bring down breaches in the next 12 months.’
The Code Governance Committee noted that increased frequency and severity of catastrophes and other significant events appears to be the norm now for the insurance industry, and insurers must adjust their business models to recognise this.
The latest Annual Data Report is available on the Code Governance Committee’s website now.