The latest review of insurers' claims handling practices by the Australian Securities and Investments Commission (ASIC) has found that while insurers implemented programmes to improve claims handling functions in recent years, and some progress has been made, there is still significant room for further improvement.
The regulator said in a statement, “We identified that without further work, there is considerable risk of ongoing consumer harm, as well as breaches of Australian financial services (AFS) licensee obligations and the General Insurance Code of Practice (Code).”
ASIC had previously examined insurers’ claims handling practices following the major floods of 2022 and found weaknesses across key areas. Recently, ASIC went back to assess how home insurers had addressed the areas of improvement identified in an August 2023 report, “Navigating the storm: ASIC’s review of home insurance claims”.
In August 2024, ASIC began a review of the action plans of seven insurers, six that participated in the August 2023 report and an additional insurer. Observations from this latest review include:
- Oversight of independent experts needs work
- Consumers deserve better information about cash settlement processes
- Increased resourcing is not necessarily keeping up with demand
- One point of contact to handle claims is improving customer communications
- Insurers are refining identification data
- Claims handling improvement programs remain inconsistent
- Audits focus more on specific claim files than broader quality assurance
Next steps
ASIC said that insurers should assess their claims handling programmes end-to-end against some of the better and poorer practices it has identified in its latest review and take steps to make meaningful improvements.
Investing in improvements to the systems, processes and workforce that support claims handling is essential for the industry to respond better to such events in the future.
Insurance claims handling remains an enforcement priority for ASIC in 2025, and evidence of significant misconduct may result in enforcement action.
On 11 April 2025, ASIC commenced proceedings against an insurer for allegedly breaching its duty of utmost good faith in its handling of a home building and contents insurance claim made in 2021, which took nearly three and a half years to resolve. This issue relates to conduct that occurred prior to ASIC’s follow-up review. ASIC continues to investigate other matters involving claims arising from the 2022 floods.