Insurers have made a swag of improvements to help their home insurance customers make better decisions, yet the sector has been implored to take further steps.
One year after conducting a survey of 23 home insurance brands, ASIC reviewed the companies again to find marked improvements in their consumer disclosure practices.
“Our goal is to make sure that consumers buy insurance that better meets their needs – including by helping to reduce levels of underinsurance, especially when there are natural disasters,” ASIC Deputy Chair Peter Kell says.
The findings come just months after the Insurance Council of Australia’s (ICA) Effective Disclosure Taskforce made a series of recommendations to better align the provision of information with customers’ needs.
ICA CEO Rob Whelan says ASIC’s research demonstrated the industry’s commitment to helping customers choose the most appropriate products to meet their individual insurance needs.
“There is still much that can be done, but the ICA is delighted to see how decisively insurers have responded to ASIC’s recommendations,” Whelan says.
“The work of the ICA’s Effective Disclosure Taskforce is still in its early stages as insurers continue looking for ways to cut through the jargon and provide information more clearly and simply.”
In particular, ASIC noted a sizeable jump in the number of insurers incorporating sum insured calculators into sales processes.
“Too many Australians underestimate how much it will cost to rebuild their home or replace their contents, and can sometimes find themselves significantly out of pocket when disaster strikes,” Whelan says.
The ASIC survey also noted improvements in the training of staff to provide clear, easily understood information about sum insured amounts, and how changes to building codes may affect their cost of rebuilding.
Although welcoming the industry’s improvements, ASIC’s survey identified that insurers could take additional steps by:
- Explaining that the sum insured amount needs to enable complete replacement of contents or complete rebuilding of their home
- Providing guidance about coverage or sum insured amounts, rather than simply referring consumers to the product disclosure statement
- Referring to the key facts sheet to assist decision making
- Providing information and guidance about natural perils risks and additional rebuilding costs due to natural perils, to better estimate rebuilding costs after a total loss.