The corporate regulator may be in breach of its duty to the public by not identifying the insurers in its new report that have questionable claims handling practices, according to Labor MP Matt Thistlethwaite.
Appearing before the House of Representatives Standing Committee on Economics last week, ASIC declined to name the insurers that were found to have higher-than-average claims denial rates and potentially conflicted incentive structures in place.
“One of the key issues we identified when we undertook the review was that the categorisation of claims handling performance is not consistent across the industry,” said ASIC deputy chair Peter Kell.
“That is clearly a problem and one that we’re going to fix in working with APRA. So we don’t want to put out information right now that may turn out to be inaccurate or may result in inaccurate comparisons across insurers. That’s not going to help anyone.”
ASIC senior executive leader Michael Saadat said that the insurers ASIC has spoken to so far have expressed “significant concern” about having their identity revealed publicly.
Mr Thistlethwaite, however, said this goes against the regulator’s obligation under the ASIC Act, which is to ensure that “Australia’s financial markets are fair and transparent, supported by confident and informed investors and consumers”.
“I’d put it to you that you’re not meeting those obligations under that Act by producing this report – which is one of the most comprehensive reports into what’s going on in the life insurance industry – but failing to provide the information about who the companies are that are not meeting what is accepted as a community standard,” Mr Thistlethwaite said.
“That doesn’t help a consumer who may be in the market at the moment for a life insurance product… I can’t see how you’re meeting your obligation under the Act to provide consumer trust and confidence and transparent and efficient markets.”
Mr Kell responded by saying that ASIC is “very keen” to name the insurers, and will do so as part of a new public reporting regime to be launched in 2017.
“There will be no other jurisdiction on the planet that will have this transparency that we’re talking about,” he said.
“It’s a very high priority to get that in place… We do not want to get the information out now that may be comparing apples with oranges.”
ASIC chair Greg Medcraft later agreed to reveal the insurers' identities 'in camera' for the committee. ASIC is set to conduct further investigation into those companies with abnormal claims denial rates, Mr Kell said.
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