ASIC deputy chair Karen Chester reminded the industry that under changes that took effect in January,insurers must act “efficiently,honestly and fairly” in handling claims.
It is legal for insurers to put customers under surveillance,but the regulator says it should be strictly controlled,and used only if the insurer cannot verify information in another way.
“Non-disclosure investigations and physical surveillance are intrusive measures and insurers must ensure they have reasonable grounds to undertake them. We expect physical surveillances to be used as a last resort only,” Chester said.
An ASIC spokeswoman added that if a claim involved a mental health issue,there was a risk that surveillance by an insurance company could exacerbate the customer’s condition.
A spokeswoman for the Financial Services Council pointed to a new life insurance code of practice that will come into effect next July,saying this would address concerns raised by ASIC and further restrict the use of surveillance. The new code also had provisions to prevent insurers using “fishing”,she said.
“The new code lifts claims handling standards across the industry and will mean consumers can make a claim on their life insurance policy with confidence they will be treated fairly and compassionately,” she said.
ASIC’s investigation covered industry giants AIA Australia (which bought theCommonwealth Bank’s life insurance business),TAL,Zurich,MLC,Resolution Life (which bought AMP’s business),and Westpac’s previously owned life business.
ASIC said its inquiries were continuing with insurers that had a higher proportion of potentially unwarranted investigations.
“We are putting insurers on notice that we will take action where we see consumer harm from poor claims handling practices,” Chester said.
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