Australia’s life insurers will be required to publish customer dispute numbers every six months, top financial regulators said on Wednesday, as a misconduct inquiry threatens other reforms that could hurt industry profitability.
For the first time, customers will be able to see comparable dispute and claims data of each insurer, helping to make better choices, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) said.
The move comes follows criticism last month by the powerful Royal Commission inquiry into financial services misconduct that faulted both regulators for allowing widespread wrongdoing in the banking and insurance sectors.
“The introduction of a legally binding reporting standard will improve the consistency and reliability of the data we receive,” APRA member Geoff Summerhayes said in a statement.
The new standardized claims data would help the regulators identify emerging problems in the industry, said ASIC’s deputy chairman, Peter Kell.
Life insurers must submit details of the number of claims, the duration of the handling process, and the number of customer complaints for the year ending June 30, 2018 by December 28, and within weeks of the end of each semester after that.
Last month, the government-ordered investigation exposed how some of the largest insurers, including Australian units of multinationals, may have broken laws – some of which carry criminal penalties.
The inquiry is considering whether laws should be strengthened to protect consumers amid evidence of rampant misconduct, including poor handling of insurance claims, inappropriate selling techniques and use of outdated medical definitions to avoid claim payouts.
It will deliver its recommendations in February.
On Wednesday, credit agency S&P Global Ratings said the prospect of legislative changes amid the inquiry’s revelations of poor claims handling could hurt the profitability of insurers in Australia.
“There are prospects of legislative changes affecting group business that threaten to further erode margins,” said credit analyst Mark Legge. “All these challenges reinforce the negative trend we see for the sector.”
(Reporting by Paulina Duran; editing by Clarence Fernandez)
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