The Australian Financial Reporter today offers a helpful guide on how to avoid a $1.5 billion car policy fraud claim.
The report, which was commissioned by the Insurance Council of Australia (ICA), offers advice on how insurance companies can be held accountable when they are found to have breached their responsibility to protect consumers.ICA chief executive Richard Venter said the report was a “must-read for anyone who cares about consumer protections”.
“The fraud is endemic, and it needs to be addressed,” he said.
“We need to have better ways of communicating to consumers that there is a fine line between legitimate and fraudulent claims.”
The report recommends that the ACCC take the lead in investigating the claims of fraudulent insurance policies and provide financial penalties for those who are found liable.
It also recommends that companies take greater steps to identify fraudulent insurance claims and ensure they are resolved in a timely fashion.
“It is important that consumers are confident in their ability to access their policies and claim for coverage, and that insurance companies take the appropriate steps to resolve claims as soon as possible,” the report says.
“A high rate of fraudulent claims is a threat to consumer confidence.”
The authors of the report, from the Institute of Insurance and Insurance Regulation (IISR), also recommend that insurance industry stakeholders work together to reduce the number of claims that are fraudulent.
“This is a significant area where the industry needs to work together and learn from each other,” said IISR chair Professor John O’Brien.
The report also calls for better communication with insurers and for the ACCCC to “step in and be proactive in identifying the underlying causes of the fraudulent claims”.
It is a call for a system where consumers can see how much they are being charged for a policy and the full cost of their insurance, including deductibles, outgoings and out-of-pocket costs.
The report urges that insurers develop a mechanism whereby consumers can review claims online.
It recommends that insurance providers develop “consumer reports” detailing the claims made against them, as well as a system for consumers to share their experiences.
“There is a great need for insurers to work with the consumer to ensure they understand the risks of policies, and they will provide the information consumers need to understand their coverage and how to obtain a reasonable replacement policy,” Professor O’Briens said.
He said there was a need to educate insurers about the risks that they face and the need to work towards better consumer protection.
The ACCC is currently investigating more than 1,000 claims of car insurance fraud and claims against consumers.