REP 621 presents the results of ASIC’s review of how general insurers investigate comprehensive car insurance claims where fraud is suspected. The findings are directly relevant to car insurance claims, but are also likely to have broader relevance to the claims investigation practices of general insurers and life insurers.

Key findings of the review include the following:

• Investigations targeted mostly valid claims - of the claims that insurers investigated for suspected fraud, only 4% were ultimately declined for fraud, 10% were declined for another reason and 15% were withdrawn, while 71% were paid.
• Improved investigation practices are required – ASIC has identified practice standards that it expects insurers to implement immediately, including requesting information only if it is strictly relevant to a claim, improving consumer communication practices, and ensuring that all claims, including investigated claims, are decided within four months.
• Code standards to change - ASIC has engaged with the Insurance Council of Australia (ICA) to improve industry standards in the upcoming version of the Code. However ASIC states that further improvements are necessary to address ASIC’s expectations
• ASIC intends to take action – ASIC warns that it is working to identify breaches of the law and to take court action against insurers that have done so. ASIC specifically references the significant new civil penalties now available for breaches of the duty of utmost good faith.

View ASIC's media release.

Please contact any of us if you have any queries about REP 621.