Handling insurance claims with “…utmost good faith and dealing with complaints genuinely, promptly, fairly and consistently” are among the expectations ASIC has laid out for insurers in Australia.
ASIC has written to life insurers outlining its expectations about insurers’ responses in the current Covid-19 environment and in an overview of its letter to life insurers (along with another to general insurers) it says that insurers should be flexible in dealing with consumers’ specific circumstances.
“Where consumers are no longer able to pay premiums due to reduced income, insurers should consider how they can best respond to this issue in order to help consumers continue to maintain key insurance coverage. This might include, where appropriate and reasonable, measures including premium ‘holidays’, deferrals, or reductions for a reasonable period of time,” it says.
The overview says that ASIC also expects insurers to communicate proactively, clearly and accurately with consumers about their insurance cover, recognising the rapidly changing situation they are facing.
… to act in a fair, professional manner that is in line with the duty of utmost good faith…
In its detailed letter to the directors of life insurance companies ASIC says that it “… expects insurers to consider their conduct in light of the current circumstances and to act in a fair, professional manner that is in line with the duty of utmost good faith”.
“Now more than ever, it is important that life insurers stand by the commitments made in the Life Insurance Code of Practice: to be honest, fair, respectful, transparent and timely.
“It will also be a time where many more, if not most, of the life insurance industry’s customers are in a vulnerable position, may be suffering financial hardship, and require additional support,” the letter states.
“Taking steps to provide that additional support, as committed to in the Key Code Promises, will be crucial during this time.”
Flexibility in dealing with consumers
ASIC goes on to say that insurers will need to be flexible in dealing with consumers’ specific circumstances.
“ASIC expects insurers to consider, where appropriate and reasonable, going beyond the hardship provisions of the code and reviewing options for premium ‘holidays’ or deferrals for consumers who are no longer able to pay premiums due to reduced income.
“We recognise that some insurers introduced this type of flexibility in response to the tragic bushfires of summer 2019-20, and we consider a similar approach is just as important now, given the broad effect that the Covid pandemic is already having on many Australians. We expect insurers to try to find workable options to allow consumers in hardship to continue their cover.”
ASIC also expects insurers to consider whether outcomes will be fair for consumers if they have to actively ‘opt in’ or make a request in order to receive any benefit insurers offer in response to the Covid Pandemic.
Handling claims and complaints
The letter also notes that ASIC expects insurers to handle insurance claims “… with utmost good faith and to deal with complaints genuinely, promptly, fairly and consistently. ASIC also expects that … directors, seek affirmation through board reporting that this is happening”.
“For example, while we acknowledge the impact of the Covid pandemic on insurers’ operations, ASIC expects that consumers who make or wish to make claims have their claims lodged and assessed with minimal delay.
“This may require insurers to adjust usual practices where Government requirements or recommendations are in place due to the Covid pandemic, including using local medical professionals for assessments to avoid lengthy travel or using video consultations.”
It also goes on to say that insurers should also apply appropriate flexibility in their treatment of consumers whose personal and/or working conditions have changed as a result of the Covid pandemic, for example where these working conditions impact their income protection or TPD claim outcome.
“In particular, insurers should proactively apply the Urgent Financial Need provisions in … the code for all affected claimants, including consumers making a Covid pandemic related income protection or TPD claim,” the letter states.