Scathing probe finds insurers ‘wear down’ customers

AUSTRALIA'S car insurers have been criticised for an unnecessarily hostile environment when claims are investigated. And our corporate cop says consumers deserve better.

The review into investigations of comprehensive car insurance claims where fraud was suspected found insurers were frequently engaging in "harmful and unreasonable" practices.

Insurers carried out interviews "like interrogations", demanded "excessively long or successive interviews" from customers as well as "onerous, unexplained" information requests, the scathing probe by the Australian Securities and Investments Commission found.

Motorists could also be left without a vehicle for up to a year while an investigation was carried out, the review found.

The unnecessarily hostile environment came despite 71 per cent of customers who had their claim investigated for fraud were eventually paid out by their insurer.

The review, which follows the behaviour uncovered in last year's banking royal commission, probed insurers Allianz, Auto & General, Insurance Australia Group, Suncorp and Youi.

ASIC commissioner Sean Hughes.
ASIC commissioner Sean Hughes.

ASIC commissioner Sean Hughes said while fraud was a serious issue for the insurance industry, policy holders who had their claims investigated deserved to be treated better.

"When it comes to insurance, consumers should expect and do deserve better," Mr Hughes said.

"Insurers need effective systems to detect, investigate, decline and deter fraudulent claims. But we found insurers are putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims are ultimately paid.

"ASIC's research raises concerns that consumers are being worn down."

ASIC said it found consumers who had their claim investigated were often faced with onerous, unexplained and successive information requests.

This included criminal record checks, social media histories, birth certificates, telephone and text message records, financial statements for every bank and loan account and information about family members and friends.

The Financial Rights Legal Centre called on the insurance industry to clean up poor investigation practices.

"We regularly hear from consumers subjected to threats, bullying behaviour and harassment by unregulated insurance investigators," casework director Alexandra Kelly said.

"Consumers endure incredibly long interviews - sometimes over five hours - routinely describe being treated like criminals, and many with poor English skills are not given access to appropriate translators."

- with AAP