Insurance sector action plan welcomed – but consumer groups warn industry that ‘trust us’ doesn’t cut it
Consumer groups including the Financial Rights Legal Centre, Consumer Action Law Centre and Financial Counselling Australia have welcomed the Insurance Council of Australia’s (ICAs) Industry Action Plan responding to the General Insurance Code of Practice Independent Review and the 2022 Flood Inquiry Recommendations. However, for this announcement to mean anything and help rebuild consumer confidence in the sector, the implementation of the Industry Action Plan, and improvements in the Code of Practice need to be backed by genuine enforceability measures.
Quotes attributable to:
Drew MacRae, Senior Policy and Advocacy officer, Financial Rights Legal Centre
”General insurers have a long way to go to restore trust and confidence in a sector that systemically failed customers during the 2022 floods. Today’s announced plan to get there is welcomed but ‘trust us’ just won’t cut it.
“If insurers are genuine about leading changes to their industry – they simply must commit to = the industry Code forming part of the contract with their customers consumer. A promise is a promise. Insurers continue to breach the promises made to consumers via their Code of Practice – over 77,000 times in the 2023 financial year alone. The announcements today to improve the Code mean little unless they are backed by contractual enforceability. Only then can consumers be confident that the promises made by their insurer will be met by their insurer.
“We are also disappointed that the sector has not agreed to important commitments regarding premiums and pricing. The Insurance Law Service continues to hear from consumers hit hard by unfair pricing and premium practices. If insurers are unwilling to address these in the Code, they must agree to work with Government and consumer groups to reform the regulatory framework to remove both the poverty premium – where consumers pay more for monthly premiums versus annual premiums – and the loyalty tax – where renewals are more expensive than those for new customers.
“We note too that there are about 38 recommendations that insurers will either investigate further or will leave to individual insurers to act on if they determine it appropriate. These latter responses are particularly disappointing and consumer groups will stay on top of the sector to ensure that they address all of these issues.”
Stephanie Tonkin, Consumer Action Law Centre
“The sad truth is that insurance companies have had a culture of denying claims for far too long. The 2022 floods revealed a systemic breakdown in the way the industry interacted with customers and processed claims, so it has to rebuild trust. For that to happen this ‘action plan’ has to be backed by teeth, in that way the industry will be forced to change and focus more on the well-being of their customers than their corporate bottom-line.”
Louise Hayes, Coordinator of Disaster Recovery, Financial Counselling Australia “There are some good aspects to the ICA’s Action Plan, particularly the commitment to a vulnerability framework. However, financial counsellors urge all insurers to commit to the framework, and to make sure it’s genuinely effective by improving the Code of Practice. Financial counsellors are very concerned the plan ignores our calls for changes to inequitable pricing practises – like people paying more if they pay by the month and new customers paying less compared to existing customers. It’s simply unfair and must be addressed.”
Background
The Insurance Council of Australia’s General Insurance Industry Action Plan was released today. The Initial Report of the Independent Review of the General Insurance Code of Practice can be found here. The Final Report of the Standing Committee on Economics Inquiry into insurers’ responses to 2022 major floods claims can be found here.
Media contact: Mark Pearce, Media and Communications Adviser, 0413 299 567, media@consumeraction.org.au
