The corporate regulator is committed to improving insurance outcomes for consumers.
The Australian Securities and Investments Commission (ASIC) has seen an increase of 75 per cent in breach reports for the first half of the 2018-2019 financial year.
ASIC Commissioner Sean Hughes said at the Insurance Council of Australia Annual Forum 2019 that there has been a 30 per cent increase in 2018 than in 2017.
“This is likely to be due to the focus of the Royal Commission and increased awareness of ASIC’s expectations around compliance with this significant duty.”
Breach reports have also been the focus of the close and continuous monitoring regime that the ASIC has been involved in since last year October which is focused on how institutions ‘identify, evaluate and respond to compliance risks and breaches.’
Hughes told attendees that the insurance sector has been found wanting.
“As you are no doubt aware, 15 of the Royal Commission’s recommendations relate specifically to insurance, as do a number of the 11 referrals to ASIC,” Hughes said.
He added that the royal commission has also recommended that the exemptions related to insurance claim handling is to be removed.
There will also be a continued focus on consumer credit insurance and the investigation practices into potentially fraudulent claims.
“The data we have collected indicates that over 70 per cent of claims being investigated are in fact found to be valid and then paid,” He said.
He suggested that there may be problems with a high false positive rate when it comes to trying to identify fraudulent claims.
“We look to the insurance sector to join us in delivering such a system for your policyholders and customers. This isn’t just a nice to have, it’s a must have – not only for the success of your business but for the reputation of Australia’s financial markets,” Hughes said.
Private Health Insurance
Earlier this week the Australian Prudential Regulation Authority (APRA) published a letter to private health insurer reminding the industry that phase 2 of the PHI Policy Roadmap will be implemented on 1 July of this year.
The regulator has indicated that by now the industry should have by now:
A current Board Renewal and Assessment policy;
Separated their Board Audit and Risk Committees;
Established a Remuneration Committee and Policy;
Communicated the Board approved Fit and Proper Policy to all responsible persons;
Commenced preparation for the new fit and proper assessment and notification requirements;
Confirmed their intended auditor meets all the independence and eligibility requirements in CPS 510 and CPS 520; and
Confirmed their Appointed Actuary meets all the independence and eligibility requirements in CPS 520.