The following summaries provide further analysis of the key themes or conduct that was raised in public submissions received by the Commission.
Figure 15: Insurance submissions: Key themes
The Commission received over 430 submissions that primarily focused on issues relating to claims handling and administration in relation to a number of insurance product types. Key themes raised in these submissions included:
- substantial delays to processing and payment of claims under life policies, resulting in significant financial hardship for consumers whose incomes were affected by illness or injury;
- delays in arranging critical repairs under home and contents insurance policies, often leaving consumers without a safe or secure place to live and the stress of finding and maintaining temporary accommodation;
- reliance by an insurer on evidence that was unfavourable to the consumer’s claim, particularly where the independent expert evidence supported the claim. This included medical evidence in relation to life insurance claims, and evidence from engineers and builders in relation to general insurance claims; and
- failure by insurers to provide adequate explanation of why a claim had been rejected. A number of stories raised concerns that consumers had felt intimidated by the process, with a number saying that they were left to feel that they were responsible for the damage.
Insurance premiums and fees
More than 190 submissions related primarily to issues around insurance premiums, fees and charges. Concerns raised in these submissions included:
- default life insurance products depleting the balance of superannuation accounts, often without the consumer knowing they were paying for life insurance;
- sharp increases in premiums for life insurance policies without notice or explanation to consumers, particularly for elderly consumers on stepped premium life insurance policies. A particular concern related to consumers who were unable to change provider due to pre-existing conditions; and
- concerns about lack of transparency in relation to the calculation of premium increases on motor vehicle and home and contents policies, including the application of no-claim bonuses.
Exclusions and definitions
Over 185 submissions dealt primarily with issues relating to exclusions or definitions in insurance policies. While these largely related to life insurance policies, issues with definitions also arose in relation to home and contents policies. Some of these issues included:
- concerns about automatic exclusions in life insurance policies for mental health issues such as anxiety, depression and fatigue where those conditions are being successfully managed by the consumer or occurred a long time ago;
- cessation of coverage or denial of insurance claims on the basis that the insured had a pre-existing mental health condition where there has been no previous diagnosis of that condition;
- rejection of claims against life insurance policies based on medically inaccurate or outdated definitions around medical conditions, including cardiac arrest; and
- rejection of general insurance claims following natural disasters due to disputes about definitions and causes of damage, particularly in relation to water damage and flooding.
Sale of inappropriate products
The Commission received over 160 submissions which identified concerns about the sale of insurance products that were not appropriate for the needs of the consumer, including issues with default insurance products under superannuation funds. This made up 10% of submissions received relating to insurance. Issues highlighted in these submissions included:
- sale of income protection insurance to students, casual workers and retirees who would be ineligible to claim under those policies;
- inclusion of default life insurance products in superannuation accounts of low income earners or those with low superannuation balances, causing depletion of superannuation balances; and
- sale of high premium products that offered unsuitable coverage by financial advisers, raising concerns about conflicts of interest.
Changes to coverage
The Commission received over 75 submissions that focused on changes to a consumer’s insurance coverage without their authority or knowledge. The following issues arose in these submissions:
- cancellation of general and life insurance policies without notification to the consumer until they sought to make a claim;
- insurers unilaterally altering coverage on general and life insurance policies, often without notification to the customer, including removal of specific types of damage from home and contents insurance, or changes in type of life insurance policy;
- insurers or superannuation funds reinstating cancelled insurance policies without authorisation from the consumer; and
- changes to the extent of coverage offered when an insurance company was acquired by another financial services entity.
Over 65 submissions identified inappropriate or improper conduct by insurers or other financial services entities involved in handling insurance issues. Types of conduct that were raised included:
- disclosure of personal information including medical records and financial information to third parties without authorisation;
- falsification of documents by insurers, including insurance contracts and independent expert reports; and
- intimidating behaviour or harassment by investigators contracted to conduct surveillance on insurance claimants, particularly where the claim related to a mental health condition.