Henderson criticises market regulator over insurance trouble

CORANGAMITE federal member Sarah Henderson has taken aim at the market regulator for a lack of action following contentious insurance claims following the bushfires at Wye River and Separation Creek.

Insurance companies including Suncorp’s subsidiary AAMI Insurance have been criticised for their slow reaction in paying out complete replacement cover claims to people whose homes were lost in the bushfires, including payouts that were up to $500,000 short of what was needed for a rebuild.

Ms Henderson spoke out several times on the issue, which the federal government eventually referred to the Australian Securities and Investments Commission (ASIC).

She raised the issue again in her capacity as chair of the Parliamentary Standing Committee on Economics, which questioned ASIC in Canberra on Friday.

In a statement after the public hearing, Ms Henderson said that while ASIC found that AAMI Insurance had misled consumers and fined the insurer accordingly, she was disappointed in ASIC’s response.

“I do not believe that ASIC ever appropriately addressed AAMI’s conduct.

“If changes in the law were required, why didn’t ASIC say something at the time?

“Insurers should not be allowed to get away with ripping off consumers, as AAMI attempted to do,
particularly those people who suffer loss and trauma in a natural disaster.”

In the hearing, ASIC’s Michael Saadat said the commission “considered all of the regulatory options that were available to us”.

He said claims handling was not a financial service over which ASIC’s jurisdiction applied, as there was
an exemption that an insurer’s claims handling did not have to meet the requirement of being efficient, honest or fair (unlike all other financial service activities under the Corporations Act).

“We highlighted that in 2016 when we did a review of life insurance claims handling, and we made a recommendation to the government that the government remove that exemption.

“The government has accepted that recommendation but is now awaiting the royal commission before proceeding with the removal of that exemption.”