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Insurer Sanctioned by CGC for Serious Claims and Complaints Handling Failures
Insurer Sanctioned by CGC for Serious Claims and Complaints Handling Failures
By Ian Rogers
The General Insurance Code Governance Committee (CGC) has sanctioned an insurer for significant breaches of the General Insurance Code of Practice, requiring it to make a $100,000 Community Benefit Payment following serious failures in its handling of claims and complaints.
The breaches impacted 35 customers, including 22 affected by severe weather events, and highlighted major deficiencies in the insurer’s operations during critical times.
Failures in Claims and Complaints Handling
Chair of the CGC, Ms. Veronique Ingram, condemned the insurer’s shortcomings:
“When customers turn to insurers for help during times of crisis, they have the right to expect timely, effective, and fair support. This insurer fell well short of that expectation.”
The insurer’s operational changes introduced confusion, a breakdown in processes, and a lack of accountability. These issues caused:
- Delays in claims resolution.
- Ineffective repairs that prolonged hardship for many customers.
- Failures to address complaints, compounding the harm caused by the delays.
One customer endured an especially frustrating experience, lodging 12 complaints before the insurer addressed their issues, underscoring the systemic deficiencies in its complaints handling practices.
Steps Taken to Rectify Failures
Since the breaches were identified, the insurer has taken steps to address the harm caused, including:
- Paying $1.2 million in compensation to affected customers.
- Completing outstanding repairs and settling claims.
- Conducting a comprehensive review of its claims handling processes to prevent future issues.
Ms. Ingram acknowledged the insurer’s efforts:
“We acknowledge the insurer’s commitment to fixing its mistakes and compensating impacted customers. This proactive response is a reminder to all insurers that swift and transparent action can restore trust after things go wrong.”
Sanction and Community Benefit Payment
As part of the CGC’s sanction, the insurer will make a $100,000 Community Benefit Payment, which will be distributed to a charity supporting vulnerable individuals.
Ms. Ingram highlighted the significance of this payment:
“This Community Benefit Payment reflects the severity of the harm caused while ensuring a positive outcome for others who may find themselves in vulnerable situations.”
Industry Expectations and Future Compliance
The CGC chose not to name the insurer due to its cooperation, transparency, and accountability in addressing the breaches.
Ms. Ingram emphasised the importance of the insurer’s response as a model for the industry:
“The insurer’s actions immediately after identifying its failures set a strong example. Taking responsibility, comprehensively rectifying harm, and learning from mistakes are the standards we expect all insurers to uphold.”
The CGC will continue to monitor compliance across the insurance industry to ensure insurers:
- Act swiftly during times of crisis.
- Take responsibility for operational failures.
- Implement robust claims management and complaints handling processes to protect customers and maintain trust.
Ms. Ingram concluded:
“The harm caused by these failures underscores the critical need for insurers to have strong systems in place. Upholding the standards of the Code of Practice is essential for ensuring customers receive the timely and fair support they deserve.”
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