Drop your breaches

Code violations are soaring, and sanctions may be on the horizon

The General Insurance Code Governance Committee has flagged a “troubling” rise in breaches as the industry continues to struggle with claims handling time frames.

The number of breaches reported last  financial year grew 34% to 77,886, and those relating to claims handling increased 16% to 45,331, a new report shows.

The commitment to tell policyholders about their claims’ progress “at least every 20 business days” was the most broken obligation overall – a staggering 28,189 breaches, compared with 17,661 the year before.

Insurers were still battling record claims from the 2022 flood events during much of the period covered by the annual data and compliance report. At the time, industry sources told insuranceNEWS.com.au staffing pressures would inevitably lead to “tens of thousands” of communication breaches.

The report shows a small cohort of insurers were responsible for most of the claims handling breaches, and the committee urged those firms to invest in resourcing, training and technology.

“We know that insurers were dealing with greater volumes of claims, but claims handling time frames are crucial for customer wellbeing,” committee chair Veronique Ingram said.

“It is troubling that we saw such significant numbers of breaches in this reporting period.”

The committee says it has engaged with the insurers that are driving the increase in claims handling breaches. “If we observe sustained non-compliance, without commitment to improve and implement changes, we will consider further action, including sanctions where appropriate.”

The committee can name and shame companies, or hand out penalties of up to $100,000. But to date these powers have not been used.