Insurers Overhaul Claims Process

Sydney Morning Herald

Tuesday July 19, 2005

Kirsty Needham Consumer Reporter

Insurance companies will have 12 months to overhaul the way they deal with customers after the industry adopted a new code of conduct.

Under the code, insurers will be required to make decisions on claims and notify customers of them within 10 days of receiving all relevant material.

Claims will be speeded up, or advance payments made within five days, to customers suffering financial hardship.

Anyone refused insurance must be given a reason, and referred to another insurer or to the industry ombudsman.

The Consumers Federation of Australia's deputy chairwoman, Fiona Guthrie, said she was concerned that some people could not obtain insurance. "They have now said if you are denied insurance you have the right to ask why," she said.

The Insurance Council of Australia's president, Michael Hawker, said the code, which applied to its members, would cover 90 per cent of the industry and provide greater transparency.

Mr Hawker said there was "a vast range of different time frames" for claims.

The Consumers Federation welcomed the code as fair and far-reaching. Broader sanctions on companies that breached industry standards will be made available. A "name and shame" regime would put corporate reputations on the line, Ms Guthrie said.

Other provisions include:

* Natural disaster claims will be able to be reviewed after they have been settled, in order to add forgotten valuables.

* If an insurance company selects a repairer, the insurer takes responsibility for quality of repairs.

Ms Guthrie said the industry needed to do more work to improve product design, address bad sales techniques and solve the problem of underinsurance.

The insurance industry pays $55 million in claims each day. The council said there were 41 million insurance policies in Australia and the ombudsman dealt with 2000 complaints a year, of which half were found in favour of the consumer.

Mr Hawker said the changes would not have an impact on insurance premiums.

© 2005 Sydney Morning Herald

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