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The new Claims Handling Authorisation obligation will be tested with summer storm upon us

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As the industry adds the final touches to preparedness for Claims Handling Authorisation, ASIC's Senior Executive Leader, Insurers, Dr Rhys Bollen recently addressed the Insurance Council of Australia's 2021 Industry Forum.

'Improving customer outcomes for disaster insurance claims is a priority project for ASIC', Mr Bollen said

Insurers have a responsibility to act efficiently, honestly & fairly to give customers the help they need. And this season, new obligations also apply: the design & distribution obligations (DDO), Unfair contract terms, claims handling reforms & the new GI Code of Practice.

Last year, ASIC engaged with insurers & customers to understand how disaster insurance claims were managed.

ASIC's research found that, while more customers were satisfied than not, there were three significant friction points in making claims.

Customers had to re-explain their claims to multiple operators;
Customers wanted more transparency about the assessment process & how their claim was tracking; &
Some customers were unaware of limitations in their cover.

Point 3 is critical for insurers to keep in mind for the upcoming summer disaster season.

'Given the findings of our research & the commencement of the design & distribution obligations', Mr Bollen said, 'insurers need to consider whether their products are designed to meet the needs of consumers who live in parts of Australia that are prone to disasters'.

Mr Bollen highlighted the implementation of claims handling reforms on 1 January 2022. From that date, all firms that provide claims handling services will be licensed under the AFSL regime.

This year, ASIC is reviewing claims handling in life insurance, focusing on historically problematic practices.

'We may do something similar next year in the general insurance space.' said Mr Bollen

With these customer-focused reforms commencing, Mr Bollen called on insurers to be prepared to meet their ongoing & new duties in handling claims this summer, recommending:

centralising oversight of disaster claims, with a dedicated end-to-end claims manager, to prevent claimants having to re-tell their story to multiple staff; &
proactively & effectively communicating with claimants about the process, including how their claim will be assessed, how long it will take & how their claim is progressing.

With summer season soon upon us, now is a great time to conduct an independent holistic review of compliance with our claim obligations.

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General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Raj Kumar, DKG Insurance Brokers, ABN 35 000 663 221, AFSL 231146

This article originally appeared on ASIC Media and has been published here with permission.