Insurance industry files used to decide whether to give customers coverage and how much to charge are riddled with errors, according to new research.
There was a material error in each of 15 “My Insurance Claim” reports examined by researchers for the Financial Rights Legal Centre, the advocacy service said.
The FRLC said the reports, which currently cost $22 for consumers to obtain, should be free and the complicated process of applying for your file should be made simpler.
It has called on the industry to clean up its act and for the federal government to intervene to improve customer access to their own data, which the researchers found was difficult to obtain even from your own insurance company.
“I was gobsmacked at how bad the quality of the data and the process was,” Drew MacRae, a senior policy officer at FRLC, said.
“Frankly I thought the insurance sector at its heart is about data, it’s about being able to calculate risk and it should be their bread and butter, so I was a bit surprised to see how poor the data standards were.”
The Insurance Council of Australia provides the reports, which are supposed to summarise insurance information – including claims made, paid and denied – to insurers and consumers through a subsidiary called Insurance Reference Services.
However, the FRLC’s researchers, Roger Clarke and Nigel Waters of Xamax Consultancy, found that errors in the reports included missing claims, the listing of additional claims that were never made and incorrect settlement and excess figures.
In addition, they said obtaining the report involved a multi-step process that involved filling out an insecure form in Microsoft Word format, which included text in four-point type and the Windings font used to display symbols, and emailing it back to a service provider.
The researchers found that after sending off the form it usually took three to four days to receive the report, but sometimes took as long as a month.
While privacy rules require companies to provide the information they hold on customers to them free of charge, the researchers found that actually getting the data was a difficult and bureaucratic process and produced inconsistent results.
“Some of them we literally got … one line with three points of information,” MacRae said.
“And then others, we’ve got 170 pages, a 10mb file full of screenshots that were unintelligible and unexplained.
“In the data world, with insurance, you either get minimal information, like a skerrick of information, or you get a whole lot and you have no idea what to do with it. And I just think that needs to be sorted.”
The findings should concern the Office of the Australian Information Commissioner, which oversees privacy issues, as well as the insurance industry’s primary regulator, the Australian Prudential Regulation Authority, he said.
MacRae said the industry needed to act quickly because it will soon become subject to consumer data right rules, which are designed to give consumers more access to and control over personal information about them held by companies. The rules already operate in the banking and utilities sectors.
“It really needs to be done in such a way that ensures people’s privacy is kept secure and that there are safety and security measures in place,” he said.
An ICA spokesperson said the organisation welcomed the FRLC report and was already working on improving the IRS service.
“IRS and its 16 insurer members are well advanced in a significant data improvement program in 2022 to address IRS data quality and consistency across the 16 insurers, that will address many of the points raised in the FRLC report,” the spokesperson said.
“In addition to these issues of process, insurers see a significant need for engagement and policy deliberation around the proposed introduction of the consumer data right to general insurance.
“While CDR may provide customers with greater control over their personal information it will also give insurers much greater line of sight on customer data.”
Application times would be shorter under the CDR, the spokesperson said.
