Insurers behaving badly: who will pay the price?
The customer had lodged a home-and-contents claim after wild weather, but the insurer’s call centre couldn’t satisfactorily answer their questions. So, on a recorded conversation the corporate regulator reviewed, the customer asked how they could speak to another staff member.
“I guess you can hang up and re-call,” was the reply.
‘More action’: Dylan Stringer has been frustrated with how his flood insurance claim from February last year has been handled. Jamila Toderas
With that snippy advice, one customer’s bad experience became a symbol of bad insurance. As claims mount following $5.9 billion in damage from east coast flooding last year, there are strains on getting jobs done promptly. Or politely, at times.
The transcript was part of an Australian Securities and Investments Commission review last month that warned insurers need to better resource claims and complaints handling.
While investors are increasingly warming to the insurance sector – no doubt encouraged by soaring premiums, some ballooning more than 20 per cent – it appears to be operating in a tougher regulatory environment, as it is overseas.
The industry says it needs to reprice to cover spiralling disaster costs, but insurer profits might benefit from a drier El Nino period this year, meaning fewer car accidents on slippery roads, for instance.
Then there’s the $815 million in discounts that were never passed on, while litigation raises allegations of sly pricing tactics. The Australian Financial Review can reveal action against individual executives is also being threatened.
At its heart, insurance serves a public good by splitting among the community the cost to help individuals struck by disaster. The big players now in home and car cover are
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