Insurers have been criticised by advocacy group the Consumer Action Law Centre as it marks its 20th anniversary.

“There has been a change in tone for the industry over the past 20 years, with insurers increasingly relying on complex products, opaque pricing practices and claims processes that too often place the burden on consumers,” centre CEO Stephanie Tonkin said.

“People in vulnerable situations are worst impacted, especially when they need help most.”

She says one of the “clearest examples” of the trend was the “junk insurance scandal, where millions of Australians were sold low- or no-value insurance products through aggressive and underhanded sales practices.

“We helped expose these practices and advocated for reforms that were later reinforced by the financial services royal commission. This led to stronger consumer protections, including the deferred sales model and anti-hawking laws.”

Ms Tonkin also points to insurer responses following the major floods in 2022, saying: “We worked with affected communities and documented widespread problems in claims handling, including long delays, inconsistent decisions, low settlement offers and poor communication.

“These experiences clearly revealed an industry that, in many cases, prioritised process and profits over people at a time of crisis.

“The parliamentary flood inquiry ... found a ‘collective failure’ by insurers to meet their obligations and made extensive recommendations to improve claims handling, accountability and transparency.

“We strongly supported implementation of those reforms. Insurance should provide genuine protection and peace of mind, not confusion, exclusion or hardship when people need support the most.”

Ms Tonkin notes the centre also helped expose “the shocking harms of the Youpla/ACBF funeral insurance scandal, where many First Nations consumers paid premiums for years only to discover they would not receive the benefits they expected.

“The collapse highlighted the devastating consequences of poor regulation and inadequate consumer safeguards.”

The Consumer Action Law Centre marked its milestone last Thursday. It was formed in 2006 in a merger of the Consumer Credit Legal Service and Consumer Law Centre Victoria.