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Insurance Regulatory risk report 2023
Insurance Regulatory risk report 2023

Enforcement priorities and consequences

Consumer-facing insurance products remain the key focus

Unsurprisingly, consumer-facing insurance products remain the key focus for regulators, with our review uncovering no reported cases involving commercial or intermediated insurance products. In particular, the data suggests heightened risk for:

  • Mainstream insurance lines (such as home building and contents, income protection and motor vehicle insurance), likely as a result of the prevalence of these policies and their social impact. This risk will be especially acute following natural disasters and other events, when ASIC will expect a heightened focus on efficient claims handling and responsiveness to the needs of individual claimants.
  • Insurance products that may be directed to vulnerable or at risk segments of the population, including income protection, life and total and permanent disability, credit and funeral insurance.

Consistent with this data, ASIC and APRA recently reported an uptick in individual disputes in relation to life insurance policies, most notably for disability income insurance and funeral cover.1

Increased penalties for contraventions

Depending on the type of enforcement action, the consequences for insurers can be serious. During the period from 2015 to date, court based civil penalties have ranged between $360,000 and $40 million. There is a clear upward trend in penalty amounts, with the highest two penalties on record both awarded against insurers in 2023.

 

 

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Further, while not possible to measure robustly through publicly available data, the quantum of insurers' customer remediations appears to be increasing as well, likely in response to ASIC's recent audit of insurers' pricing commitments. In June 2023, ASIC reported that general insurers had agreed to remediate over $815 million to more than 5.6 million affected consumers, involving over 6.5 million policies.2

 

 

 

Footnotes

  1. Life Insurance Claims and Dispute Statistics June 2023.

  2. When the price is not right: Making good on insurance pricing promises (ASIC Report No 765, June 2023) 3.