In February 2012, the ICA approved amendments to the Code to enhance the claims handling standards outlined in section 3 and to remove section 4.348 from the Code, with transition occurring from February 2012 until 30 June 2012. The amended Code became operational on 1 July 2012.
The principal changes to the Code were precipitated by the flood events that occurred in Queensland during December 2010 and January 201149. The revised claims handling consisted of the following.
A new section 3.4
This is a new section applicable only to claims arising from “specified classes of policies” defined as:
“... any of the following types of policies: a) motor vehicle
b) home building c) home contents
d) sickness and accident e) consumer credit; or f) travel.”
Section 3.4.1 requires a Code Participant to determine all claims under specified classes of policies within four months of the date of the claim. This requirement applies to claims arising from a catastrophe or disaster, unless an “exceptional circumstance” applies. If an “exceptional circumstance” applies to the claim, the new section 3.4.2 allows a Code Participant to extend the timeframe to 12 months. The Code defines “exceptional
circumstance” to mean the following:
“a) the claim arises from an extraordinary catastrophe or disaster as declared by the Board of the Insurance Council of Australia;
b) the claim is fraudulent or we suspect fraud;
c) there is a failure by you to respond to our reasonable inquiries or requests for documents or information concerning your claim;
d) there are difficulties in communicating with you in relation to the claim due to circumstances beyond our control; or
e) you request a delay in the claims process.
and includes claims that arises from an “extraordinary catastrophe or disaster as declared by the Board of the Insurance Council of Australia.”
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The former section 4.3 provided as follows: Due to the large number of claims we may not be able to meet all the standards of his Code following a catastrophe or disaster.
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Flooding in Queensland between 21 December 2010 and 14 January 2011, affecting Brisbane, Toowoomba, Lockyer Valley and rural Queensland.
A new section 3.4.3
Customers who wish to lodge a claim under a specified class of policy now have a “right to claim”. This standard means that a Code Participant cannot discourage a customer from lodging a claim, even if it is of the view that it is unlikely to be accepted.
A new section 3.4.4
A timeframe of twelve weeks will apply when a Code Participant engages an external expert to provide a report. The Code defines “external expert” to mean:
“...an individual or company who is not our employee but who is engaged by us solely to provide an expert opinion as to the likely cause of your loss or damage but does not include a service provider.”
A new section 3.5.5(b)(i)& (ii) and 3.5.5(d)
The standards in section 3.5.5 are applicable to all claims and outline what a Code Participant must do when denying a claim. The new section 3.5.5(b)(i) and (ii) require a Code Participant to inform customers that they can ask for copies of information relied upon in denying a claim and of their right to request a review if their request is refused. The new section 3.5.5(d) requires the Code Participant to make available hydrology and other external expert reports, used in assessing the claim, to the customer within ten business days of their request.
Amendments to sections 3.7.6 and 3.7.7
Section 3.7.6 has been amended to reflect current industry practice and requires staff training staff on dealing with customers in a professional manner. The new section 3.7.6(d) requires staff training to cover “understanding the consumer situation particularly in the aftermath of a catastrophe or disaster”.
Previous sections 4.3 and 4.4
With the introduction of the new section 3.4, the former sections 4.3 and 4.4, which had allowed for flexible Code compliance during catastrophes and disasters, have been deleted.
We have summarised the Code’s former and current claims handling standards in Diagram 5 below.
Diagram 5: The Code’s claims handling standards – Changes effective 1 July 2012
Section 4.2 - May 2010 Code and July 2012 Code
The insurer agrees to respond to the catastrophe or disaster in a fast, professional and practical way and in a compassionate manner.
Section 4.6 - May 2010 Code and Section 4.4 - July 2012 Code
The insurer will work with the ICA in its role of industry coordination and communication under the ICA’s catastrophe coordination arrangements.
May 2010 Code June 2012 Code
Section 4.3
The insurer may not be able to meet all standards of the Code following the catastrophe or disaster due to
the large number of claims Section 4.4
The insurer will establish their own internal processes for responding to catastrophes and
natural disasters.
Section 3.2
Claims handing standards within Section 3.2 do not incorporate timeframes for making a decision on a
claim under either normal or exceptional circumstances, the customer’s right to lodge a claim
or the provision of external reports to the insurer within a specified time period.
Section 3.3
If the claims handling standards outlined in Section 3 are not practical due, for example, to the complex nature of the customer’s claim, the insurer will agree
to reasonable alternative time frames with the customer. If the customer and the insurer cannot
agree, the customer can access the insurer’s complaints handling procedures.
Sections 4.3 and 4.4
Of the May 2010 Code have been omitted. Sections 3.3
Of the May 2010 Code remains unchanged.
Section 3.4
Claims handling standards have been added to apply to domestic classes of policy (for e.g. Home, Motor). New standards include a requirement to accept/deny a
claim within 4 months under normal circumstances, or within 12 months in exceptional circumstances (for e.g.
an extraordinary catastrophe or disaster), advice on how to access internal and external dispute resolution if
unable to make a decision within the specified time frame, the right of the customer to lodge a claim and
the provision of reports by external experts to the insurer within a specified period.
Section 3.5
Claims handing standards have been revised to incorporate new requirements in relation to informing
the customer of the right to ask for information and reports relied on in assessing the claim and access to
IDR where access has been denied. Section 3.7
Claims handing standards have been revised to ensure employees are trained to deal with customers professionally and understand the customer’s situation
following a catastrophe or disaster. Section 4.5 - May 2010 Code and Section 4.3 - July 2012 Code
If the customer has a property claim resulting from a catastrophe or disaster and the insurer has finalised their claim within one month of the catastrophe or disaster, the customer can request a review of their claim if they think the assessment of their loss was not complete or accurate, even though they may have signed a release. The insurer will give the customer six months from the finalisation of the claim to ask for a review of their claim. The insurer will
inform the customer of this entitlement when it finalises the customer’s claim and of its complaints handling procedures.
Section 4.1 - May 2010 Code and July 2012 Code