Insurers' surveillance techniques under scrutiny
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The Australian Securities and Investments Commission (ASIC) is to undertake a review of insurance company practices of surveillance and investigation of claim-making customers. In 2016 consumer group Financial Rights Legal Centre said that insurance industry estimates of fraud are 'routinely exaggerated' to justify the assumption of guilt. A report by the consumer group looked at the experiences of 40 consumers that pointed towards racial profiling and five-hour-long interviews.
The Financial Rights Legal Centre argues that there is a lack of rules and consumer protections for customers being investigated by insurance companies. There are no standards for conduct of claims investigation in the General Insurance Code of Practice, and no guidelines for the use of interpreters or independent support people, neutral locations for interviews, or any legal requirement to inform people they have a right to legal representation. There are no interview time limits.
The report, Guilty until proven innocent, looks into the investigations process and customer experience using case studies, surveys, insurer and investigator interviews, Financial Ombudsman determinations, and academic research and government reports. The allegations made by the Financial Rights Legal Centre are being investigated by the independent Code Governance Committee, with the report due in April 2017.
Findings of the Guilty until proven innocent report include:
- Almost a quarter of all 8,000 calls during 2016 to the Insurance Law Service were from policyholders with concerns relating to an insurance investigation
- The average insurance investigation dispute takes 18 months, with some disputes lasting up to three years.
- Many customers withdraw claims due to the demands put upon them by investigations
- There are very few (if any) safeguards to protect consumers
- It calls the private investigator sector the 'wild west', with licensing vastly different between states and very few consumer protections
- The report has 14 recommendations, including setting up best-practice guidelines included in the General Insurance Code of Practice
There were five main issues identified in the report, including communication and delay issues, poor investigator behaviour and investigation processes, unreasonable requests for information and/or documentation, unique issues faced by vulnerable people, and the pursuit of investigations with little or no evidence to assume guilt.
