The Australian Consumers Insurance Lobby Inc. (ACIL) has formally expressed concerns to the Insurance Council of Australia (ICA) regarding the recently released General Insurance Code of Practice Independent Review Initial Report, as well as the Use of Expert Reports Industry Best Practice Standard.
ACIL, representing the interests of insurance consumers, has identified critical gaps in the current proposals that fail to address significant issues associated with expert reports in insurance claims processes. ACIL Chairperson, Tyrone Shandiman, raised these concerns in a recent meeting and a series of letters to ICA, emphasising the need for more comprehensive standards and accountability measures for experts involved in insurance claims.
What’s Missing?
While the Use of Expert Reports Industry Best Practice Standard governs how insurers use expert reports, ACIL is alarmed that no clear standards are imposed on the experts themselves regarding the production of their reports or the evidence they provide. Consumer advocates have reported to ACIL that insurers do not appear to have taken any steps to implement the new standards and when concerns have been raised insurers are not seeking to comply with the new standards.
ACIL believes the current proposals lack the following essential conditions for service suppliers (experts):
Evidence-Based Reporting: Experts must provide sufficient evidence to substantiate their conclusions, ensuring opinions are well-supported and verifiable.
Accurate Citation of Regulations: Expert reports should correctly cite and apply relevant building codes, standards, and regulations in each case.
Consideration of Certified Solutions: Experts should evaluate whether performance solutions have been previously certified when reporting on defects.
Comprehensive Investigations: Experts must conduct thorough investigations relevant to the issues at hand, including the identification and undertaking of additional investigations where required, especially in complex cases.
Inconclusive Findings: Where findings are not definitive, experts should explicitly state this in their reports, rather than defaulting to interpretations that may favour insurers, such as solely identifying excluded causes for damage.
In addition to concerns about expert standards, ACIL also raised issues regarding insurers' practices that may unduly influence expert opinions and their impartiality, along with vendor contracts that incentivise denying or reducing claims. Furthermore, the current process for disputing expert opinions often places a financial burden on consumers, who are required to pay for an alternative expert to challenge the findings. ACIL believes this creates a power imbalance, as many consumers are either unable or unwilling to take on the risk of incurring substantial costs to dispute an expert’s report. ACIL believes when disputes arise, insurers should be required to use other independent providers and give consumers the choice of who should be engaged on their claim.
Call for Action
ACIL is urging the ICA to incorporate these critical issues into the new Code of Practice to ensure that consumers are not unfairly disadvantaged by the current gaps in the oversight of expert reports. "The lack of sufficient regulation around expert reporting standards creates a power imbalance that harms consumers, who often bear the financial burden of challenging expert opinions," said ACIL Chair Tyrone Shandiman. " Will insurers and their experts address this, or will they face their own “Four Corners Moment”? ASIC has signaled its intention to further scrutinise claims management practices in the industry, so it’s in insurers' best interest to act proactively.' ACIL is committed to working with the ICA to ensure these concerns are addressed and will continue advocating for stronger consumer protections."
