Insurance companies are wearing their customers down with lengthy and confusing vehicle claims investigations that often prove unnecessary, new ASIC research has found.
The corporate watchdog said its review of motor vehicle claim investigations found insurers often engaged in practices that were “harmful and unreasonable”, even where customers’ claims were ultimately paid.
ASIC’s investigation – which covered Allianz, Auto & General, IAG, Suncorp and Youi – revealed that 70 per cent of consumers who had their claims investigated for fraud were eventually paid.
But the review shows many customers endure interviews that feel more like interrogations.
“‘Fraud is a serious issue … but we found insurers are putting a significant proportion of consumers through a harmful and unreasonable process,” ASIC said on Thursday.
“Consumers deserve a fair process for investigated claims.”
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 watchdog said some insurance investigators suggested to consumers that they had fabricated their claim, while others conducted excessively long or successive interviews, and interviews without notice including in customers’ homes.
There was also inadequate support for consumers with limited English literacy, ASIC found.
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,” director of casework 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.”
ASIC said it undertook the review to understand how general insurers investigate insurance claims suspected of being fraudulent, as well as to seek to raise industry minimum standards.
It analysed internal policy documents, standard form communication and aggregated comprehensive motor insurance claims data from the five general insurers.
ASIC also commissioned consumer research as part of this review with consumers who had their claim investigated and paid.
Consumers who are unhappy with how their claim is being handled are encouraged to contact their insurer’s internal dispute resolution team or notify the Australian Financial Complaints Authority.