The corporate regulator says insurers risk breaching their licence obligations unless more is done to address claims handling weaknesses listed in its latest industry review.

Gaps in the oversight of expert reports and poor engagement with consumers around cash settlement offers are among the areas requiring improvement, the Australian Securities and Investments Commission has found. 

The industry is also failing to resource adequately to tackle a rise in disputes, and claims handling improvement programs remain inconsistent – more than a year after ASIC flagged the flaw in its 2023 review.

“Without further work, there is considerable risk of ongoing consumer harm, as well as breaches of Australian financial services licensee obligations and the General Insurance Code of Practice,” the regulator said. 

“[Our] review revealed that general insurers made progress to address the areas for improvement identified in our August 2023 report, which focused on better consumer communications, project management, handling of complaints, identification and treatment of vulnerable customers, and resourcing for dealing with claims and complaints.

“However, we found there was inconsistent progress across the industry and still room for more work.”

Insurers agree there is more to do but note the industry has made improvements, including a plan released in March in response to the inquiry into the 2022 floods and the code review last year.

A spokesperson for the Insurance Council of Australia said: “The industry is committed to improving and uplifting customer experience and has launched a reporting dashboard to track progress against ICA-led commitments to the industry action plan.  

“Progress has been made since the parliamentary insurance inquiry, but insurers acknowledge there is more work to do and remain committed to continuing to implement improvements.”

The Financial Rights Legal Centre and other consumer groups say the latest ASIC review shows insurers are “once again ... failing customers [and are] not meeting expectations”.

“ASIC’s findings of continued poor claims handling align with the issues that we hear day in and day out at the Insurance Law Service,” Financial Rights senior policy and advocacy officer Drew MacRae said.

“Ongoing delays, inadequate communications, and inconsistent treatment of customers who may need extra support are commonplace on our lines.

“Offering low-ball cash settlements to elderly people who now need to project manage serious mould issues arising out of water ingress is but one example of the types of treatment we see.”

Consumer Action Law Centre senior policy officer Rose Bruce-Smith said: “There is still serious work to be done by insurers in resourcing for complaints and external dispute resolution.”

ASIC released its findings today after examining seven insurers – Suncorp, Allianz, Auto & General, Hollard, IAG, QBE and Youi – between August and April.

The review singles out oversight of independent experts and the communication of cash settlement offers. 

“Once a claims decision had been made, insurers did not have processes to check the quality of independent expert reports, nor the accuracy of decisions that relied on them,” ASIC said.