The General Insurance Code Governance Committee (CGC) has sanctioned an insurer for significant breaches of the industry Code of Practice, requiring it to make a $100,000 Community Benefit Payment.
Serious failures in the insurer’s handling of claims and complaints significantly impacted 35 customers, including 22 affected by severe weather events.
Chair of the CGC Ms Veronique Ingram explained that the insurer did not meet expectations.
“When customers turn to insurers for help during times of crisis, they have the right to expect timely, effective, and fair support. This insurer fell well short of that expectation,” she said.
Operational changes introduced by the insurer led to confusion and a breakdown in processes and accountability, resulting in delays and ineffective repairs that prolonged hardship for many customers.
“The harm caused by these failures underscores the critical need for robust claims management practices,” Ms Ingram said.
The insurer also failed to address customer complaints, compounding the harm caused.
One customer had to make 12 complaints before their issues were addressed, revealing significant deficiencies in how the insurer handled complaints.
The insurer has since paid $1.2 million in compensation to affected customers, in addition to completing repairs and settling claims. The insurer has also conducted a comprehensive review to address the systemic issues in its claims handling processes.
“We acknowledge the insurer’s commitment to fixing its mistakes and compensating impacted customers,” Ms Ingram said. “The proactive response is a reminder to all insurers that swift and transparent action can restore trust after things go wrong.”
As part of the sanction, the insurer will make a $100,000 Community Benefit Payment which will be distributed to a charity.
“This Community Benefit Payment reflects the severity of the harm caused while ensuring a positive outcome for others who may find themselves in vulnerable situations,” Ms Ingram said.
The CGC’s decision not to name the insurer in the sanction reflects the insurer’s proactive and effective response to the breaches, and its cooperation, transparency, and accountability in addressing the harm it caused.
“The insurer’s actions immediately after identifying its failures set a strong example for the industry,” Ms Ingram said. “Taking responsibility, comprehensively rectifying harm, and learning from mistakes are the standards we expect all insurers to uphold.”
The CGC continues to monitor industry compliance and expects insurers to act swiftly, take accountability, and implement robust processes to protect customers and uphold trust in the insurance industry.
Read the full summary of the sanction.
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The General Insurance Code Governance Committee is an independent body that monitors and enforces insurers’ compliance with the Code of Practice.
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