Is Australian Insurers Data Really That Bad?

Interesting news from Australia, but perhaps all is not as it seems when it comes to the independent scientific rigour of this report.

The Australian insurance industry could be relying on erroneous or misleading information concerning consumers and their claims history when quoting, assessing new claims or setting premiums, a damning report commissioned by Financial Rights has found. The report Privacy Practices in General Insurance by Roger Clarke and Nigel Waters examined the data access and handling practices of general insurers, including the accuracy of claims data contained in My Insurance Claim Reports.

It makes 16 recommendations including that the Australian Government should step in to regulate industry-wide reporting of general insurance claims in the same manner as credit reporting. The report involved field research where consumers were asked to access personal data held by their insurers as well as their My Insurance Claims Report via the Insurance Reference Service (IRS) – the existing industry scheme for sharing personal data.

My Insurance Claim Reports contain consumers’ historical claims records that may be relied upon by insurers when quoting or assessing claims or setting premiums. Financial Rights Legal Centre Chief Executive Officer Karen Cox said the insurance industry’s work revolves around accessing and handling sensitive data about risk. Yet this report’s findings paint a picture of an industry whose data handling practices are a cause for concern.

INSURTECH TO THE RESCUE?

Insurtech Australia supports the idea of giving consumers more access to their data and the association stated last year that policyholders could compare products better armed with information, plus give consent to share data if they moved from one insurer to another. The accuracy and regular updating of claims data associated with a vehicle, or property, is crucial to the system working efficiently of course, but there is no doubt that building eco-systems along the same lines as the USA, Canada, UK, Germany and many other countries will allow brands to link data touchpoints in a way that makes sense of a policyholder’s history.

In the end it isn’t just about claims, insurance is priced on risks, like that address, previous vehicle accidents or servicing, ADAS devices being disabled, multiple cancellations within 30 days and much more.

WIDESPREAD DATA ERRORS OR JUST A SMALL, BIASED SAMPLE?

It’s hard to say because the authors of the critical report don’t give actual numbers of data requests made. In reality, it would appear to be quite small and worryingly, the report’s conclusions are partly based on the personal experiences and findings of report authors’ friends and family members. Here’s an extract from the report on their methodology;

• The first set of volunteers

These were colleagues, friends, family and acquaintances of the three study-leads. This group, as was the case with the study-leads, had only limited claims experience, but had a background in dealing with organisations. The benefit of this facet of the study was expansion of the sample of experience of process and product.

• The second set of volunteers

This comprised clients of Financial Rights’ Insurance Law Service (ILS) who had experienced difficulties with insurance claims processes. The intended benefit of this facet of the study was an appreciation of process and data quality in more problematic contexts.

As regular readers know, IE magazine has very little time for BS masquerading as scientific analaysis. There may be problems with some legacy systems used by Australian insurers and a new data rights system may not have been implemented perfectly while some Australian States were under a kind of Branch Covidian martial law, plus heavy flooding gave insurers more pressing tasks on the to-do list. Equally this report could be based on the pre-conceived prejudice of its authors and their Uni mates – we just don’t know.

Make you own mind up, take a look at the full report, which can be found on the Financial Rights publications page: https://financialrights.org.au/publication/