An Australian Securities and Investments Commission (ASIC) review of home cover claims handling has called on insurers to improve their communications and to ensure they have better project management and oversight of parties involved in repairs throughout the process. 

The report, Navigating the storm: ASIC’s review of home insurance claims, looked at data from more than 218,000 claims lodged between January and March last year, including those triggered by the severe weather catastrophes and other events. Six insurers were involved in providing data. 

ASIC says its findings also highlight the importance of managing expectations after the claim is lodged and during the recovery process. 

“Open communication and a map of the claims process led to high consumer satisfaction,” it says. “In some examples if the claim was delayed or denied, satisfaction remained high, so long as expectations were appropriately managed by insurers and third parties.”  

An ASIC spokesman says the review didn’t look at enough cases where a consumer was assisted by an intermediary, whether a broker or claims handling firm, to make any findings on their effectiveness. 

“However, we are of the view that consumers should not have to rely on engaging an intermediary in order to have an acceptable claims experience,” he told insuranceNEWS.com.au. 

ASIC says insurers need to improve claims handling resourcing so that they can handle frequent catastrophes, calls for improvement in staffing of internal dispute resolution (IDR), and identifies some failings in identifying vulnerable customers. 

“Given the increasing regularity of severe weather events where claims handling functions may be handling claims from several severe weather events, the claims from events are now overlapping,” the spokesman tells insuranceNEWS.com.au. 

“There does not appear to be a substantial ‘quiet period’ between events.  As such, ASIC suggests that a long-term increase in resourcing for claims and dispute teams is needed.” 

The review finds that some policyholders effectively end up project managing the repair process themselves, with a number of different builders, tradespeople and other personnel involved in the process. 

ASIC also looked at a lack of understanding around some exclusions, and says it will conduct further work on potential unfair contract terms relating to maintenance and “wear and tear” issues. It will also do further work on reviewing IDR performance, with new six-monthly reporting of data taking effect from August 31. 

Insurance Advisernet MD Shaun Standfield says the report provides another example of the value brokers bring in ensuring the right policy is purchased in the first instance and in assisting clients with the process, while managing expectations, following a claim. 

“Our brokers speak to clients on a regular basis once they have had a claim. If there is a delay we will speak to the builder or the insurers, we won’t let it drag on, and we know who to talk with to escalate it,” he tells insuranceNEWS.com.au. “When someone has made a claim, every customer is vulnerable to a certain extent.”