Insurance industry failing consumers
Investigation finds evidence of overcharging and poor-value products.
Another damning review of the insurance industry has found evidence of companies overcharging customers and selling poor-value products.
In its latest report, the Financial Markets Authority (FMA) slammed general insurers for their poor practices and lack of understanding of good customer service.
The FMA found many insurers were failing to monitor whether products were suitable for customers and continuing to sell poor-value products.
Problems found included insurers double-charging customers, not providing promised multi-policy discounts and significantly overcharging some premiums.
The review looked at 42 fire and general insurers, including companies providing house, contents, vehicle, travel and health insurance.
The FMA asked these companies to review their operations and demonstrate good conduct in their dealings with consumers. However, the authority said just two insurers – IAG and MAS – met its expectations.
“Prior to our inquiries, many firms claimed they were confident no significant issues existed. But this review has revealed a number of instances of poor conduct,” FMA director of banking and insurance Clare Bolingford said.
The authority concluded insurers weren’t prepared for the Financial Markets (Conduct of Institutions) Amendment Bill, which will impose good conduct obligations on the industry. The bill is currently before parliament.
We’ve been campaigning for tougher rules for the industry. Our investigations have found major problems, including a high level of complaints and low levels of trust.
Our latest survey found just 13% of consumers were confident they could trust insurers to give them good advice.
Many were unsure about the cover provided by their insurance policy and what they were getting for their money. Only 18% felt they fully understood the terms of their policies.
One in four had experienced a problem with their insurer. The top complaint was having a claim unreasonably declined, followed by poor customer service.
Pressure to accept a settlement with their insurer was reported by one in 10.
The FMA report provides further evidence of the need to regulate the industry and ensure it provides a fair deal for consumers.