ASIC’s Review Finds Car Insurance Investigations Treat Consumers Unfairly

ASIC’s review of how insurers investigate motor vehicle claims suspected of being fraudulent has found that investigation practices are leading to poor consumer outcomes. ASIC’s report released today reveals that while only a small proportion of claims are investigated, over 70 per cent of investigated claims are found to be valid and then paid.

This contrasts with only a very small number of investigated claims being declined due to fraud (four per cent). ASIC’s research raises concerns that consumers are being worn down by a lengthy and confusing process.

Many consumers who had their claim investigated and eventually paid reported poor practices by insurers and their investigators, including:

  • interviews that felt like interrogations, with some investigators suggesting to consumers that they had fabricated their claim;
  • interviews in consumers’ homes, excessively long or successive interviews, and interviews without notice;
  • onerous, unexplained and successive information requests for a wide range of documents including criminal record checks, social media histories, birth certificates, telephone and text message records, financial statements for every bank and loan account and information about family members and friends; and
  • inadequate support for additional needs such as consumers with limited English literacy not being offered an interpreter.

Fraud is a serious issue that insurers need to investigate appropriately to ensure that only legitimate claims are paid. Fraud imposes costs on the entire community through higher premiums, as well as (potentially) higher excesses and limitations in cover or additional exclusions where the cost of underwriting becomes too high. However, ASIC is calling on industry to respond to these findings by implementing better standards, improving written communication to consumers, and reviewing how claims are selected for investigation.

‘Fraud is a serious issue. Insurers need effective systems to detect, investigate, decline and deter fraudulent claims,’ said ASIC Commissioner Sean Hughes. ‘But we found insurers are putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims are ultimately paid.’ ‘When it comes to insurance, consumers should expect and do deserve better. Consumers deserve a fair process for investigated claims. Insurers must live up to the promise to pay on the policy where the claim is a genuine one.’

Consumers who are unhappy with how their claim is being handled are encouraged to contact their insurer’s internal dispute resolution team. ASIC’s MoneySmart has more information about how to lodge a complaint. Consumers who are unhappy with their insurer’s response can also complain to the Australian Financial Complaints Authority.

ASIC analysed internal policy documents, standard form communication and aggregated comprehensive motor insurance claims data from five general insurers: Allianz, Auto & General, IAG, Suncorp and Youi. ASIC also commissioned consumer research as part of this review with consumers who had their claim investigated and paid.


ASIC undertook this review to understand how general insurers investigate insurance claims suspected of being fraudulent, and to seek to raise industry minimum standards.

In March 2018 ASIC held a workshop with industry stakeholders to understand how claim investigation standards in the General Insurance Code of Practice could be improved (Code). As a result, the draft Code was updated with additional standards for insurance claim investigations. Our work indicates that the proposed standards need to be further strengthened.