Insurers still need to improve claims handling, and serious misconduct may lead to enforcement action, the Australian Securities and Investments Commission warns.

The regulator’s annual report notes “some progress has been made”, but claims handling remains an enforcement priority.

Home insurers’ oversight of independent experts needs significant work, and many consumers are left uninformed about cash settlements, it adds.

A recent review found issues around resourcing, customer communications, identification data, claims handling improvement programs, and audits.

“ASIC expects that insurers will assess their claims handling programs against the better and poorer practices we identified and take steps to make meaningful improvements,” the annual report says.

The regulator reviewed how 23 licensees use artificial intelligence. It says the technology can amplify risks to consumers and introduce new ones such as bias and discrimination, provision of false information, exploitation of vulnerabilities and behavioural biases, and the erosion of trust.

ASIC found most licensees were cautious in adopting AI, particularly for customer-focused work.