To support an effective product governance arrangements product issuers and distributors need to implement and maintain robust and effective product governance arrangements. A distributor must understand the financial products it distributes to customers, assess the compatibility of the financial products with the customers’ needs to whom it distributes, consider the issuer’s identified target market, and ensure the best interests of the customer.
It is important that the product distributor becomes aware, for example, through the analysis of customer’s complaints or other sources and data, that the sale of a certain product outside the target market identified ex-ante has become a significant phenomenon (for instance, in terms of the number of the customer involved), such input will be taken into due consideration in the course of its periodic review of the products and related services offered. In such cases, the distributor may, for example, come to the conclusion that the target market identified initially was not correct and that it needs to be reviewed or that the related distribution strategy was not appropriate for the product and has to be reconsidered.
Establishing consistent, efficient, and effective supervisory practices and guidelines on the target market assessment is essential, especially given that the implementation of the target market assessment is complex and will benefit from further clarity. The guidelines mainly address the target market assessment but do not necessarily ensure a standard, uniform, and consistent implementation approach.
To enable a level-playing field, product issuers can go beyond just providing product governance guidelines to distributors.
An issuer can enable and support the product distributor in some of the below ways to establish a coherent and practical approach in the supervision
- Policies and obligations to meet RG 274 obligations and product governance requirements
- Qualitative & quantitative criteria for the potential target market identification
- Development of review triggers
- Quality assurance of workforce to ensure they understand the role they play in the appropriateness assessment process and the skills, knowledge and expertise necessary,
including sufficient knowledge of the relevant regulatory requirements and procedures, to discharge their responsibilities.
- Audit framework for continuous control monitoring: once the target market is identified, guidelines in establishing continuous monitoring framework for process automation to support product governance requirements: Services for the mass market in particular, may require automation of processes, and this automation is usually based on formulas or algorithmic methodologies that process quantitative criteria for products and customers
- Supporting systems with product governance & compliance as a service arrangements, where the distributor cannot fulfil the obligation efficiently and accurately because of the lack of skills and technology infrastructure
- Record keeping & archiving guidelines
ASIC’s RG 274 Design and Distribution Obligations (DDO) introduces a new category of obligations concerning the design and distribution of financial products. This is a profound change, making product issuers and distributors directly responsible for ensuring products are generally only sold to the intended target markets. It is a reversal of the long-established principle of ‘let the buyer beware’ — now, it is the seller who is at risk and must beware. So simply publishing 100 pages of the disclosure document is not enough. A customer-centric approach is required to support the target market and to meet the appropriateness requirements.
The target market determination (TMD) must also meet “appropriateness requirements”. It would be reasonable to assume that it would meet their needs and objectives if it was distributed to the specified consumer group. To satisfy the appropriateness requirements, the TMD must include sufficient information to reasonably conclude that:
(a) the product, including its key attributes, is likely to be consistent with the likely objectives, financial situation and needs of consumers in the target market; and
(b) the distribution conditions make it likely that the consumers who acquire the product will be in the target market.
Unlike personal advice, the design and distribution obligations do not require an issuer to assess products’ suitability for the circumstances of individual consumers. Instead, the obligations require issuers to develop products. Those products (including their key attributes) are likely to be consistent with the likely objectives, financial situation, and needs of the class of consumers to whom the products will be distributed.
The two key principles of DDO are fairness (in designing, targeting and distributing products that meet consumer needs) and a customer-centric approach to the entire product lifecycle. A fair and customer-centric approach is one where target markets are determined so that products offer value to consumers.
Supporting customer-centric approach
A customer-centric approach is a way of doing business that fosters a positive customer experience at every customer journey stage. It builds customer loyalty and satisfaction, which leads to referrals for more customers. Anytime a customer-centric business makes a decision, it deeply considers the effect the outcome will have on its customers.
Knowing the customer provides the right raw data and critical context for analysis, advice, and recommendations.
Knowing a product means much than just knowing its basic characteristics and, roughly, what it does. The distributor’s staff must understand the risk-return and volatility potentials within a product, increasingly leading to a requirement to designate an intended target-market for that product.
Justify the connection or appropriateness means there are reasoned, logical arguments to support the recommendation, strategy or product sale — based on the agent or adviser’s understanding of the client and their knowledge of the available products. What is considered appropriate can, quite rightly, vary from person to person.
Informed consent means the customer understands the T&C and full knowledge of not meeting disclosure requirements.
Suitability is established at a point in time — but it is not static. It needs to be periodically re-established, as the individual and the financial products each change over time. Identifying any changes in the product or customer that could affect the suitability of the current arrangements.
Learning from claims related recent dispute trends
If we look at some of the complaint trends we can observe recent claim related dispute trends.
Top issues for claims dispute
AFCA’s decision outcome for fraudulent claims
Insurance contracts act is the top compliance failure reason for claim related disputes
Resolving claim disputes with Insurance Contracts Act
AFCA’s approach document “The AFCA Approach to section 54 of the Insurance Contracts Act” is a guideline for firms to understand how they can resolve claim related disputes and support an efficient IDR & EDR processes. Section 54 is a remedial provision and aims to strike a fair balance between the interest of an insurer and an insured with respect to a contractual term designed to protect the insurer from an increase in risk during the period of insurance cover.
When considering a complaint and the application of section 54, AFCA determines the complaint on the basis of what is fair in all the circumstances having regard to the relevant legal principles, the terms of the policy, good industry practice including relevant industry codes and prior AFCA or predecessor scheme decisions.
Below approach outlines how AFCA evaluates and applies section 54 of the Insurance Contracts Act 1984 to insurance complaints
Learning from AFCA’s definition of complaint and resolution approach is a great way to learn and apply section 54.
When applying section 54 to complaints, AFCA will ask
- What are the inherent limitations and restrictions within the claim?
- Is there an act or omission that occurred after the contract was entered into that the financial firm is relying upon?
- Could the act reasonably be regarded as being capable of causing or contributing to the loss?
- If yes, was the act either:
- > necessary to protect the safety of the person or preserve property or
- > could not reasonably be avoided?
- If no, has the financial firm been prejudiced by the act, and what is the extent of the prejudice?
Some of the above questions help in determining the scope and in identifying the search criteria’s to find similar disputes from the past using AFCA Insights
- Identify keywords
- Identify metadata like Issue, Category, Product, Specific issue, etc.
- Similar companies
- Decisions outcome
How is this applied in practice?
Above is a real case study (315503) and as there was no evidence that driver was not an acceptable risk or would not have been insured by the financial firm if nominated there was no prejudice to the financial firm. FOS, the predecessor of AFCA found in favour of the complainant.
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Who can use AFCA Insights tool?
- Financial firms, consumers and consumer representatives who have an insurance complaint at AFCA involving technical policy exclusions.
- Lawyers and other professionals who are assisting the insurance claims process.
- Anyone who wants to understand how AFCA applies legal principles, industry codes and good industry practice when considering insurance complaints involving s54.
Here is a full list of AFCA complaint resolution approaches.
Royal Commission’s final report recommended that insurance claims handling should not be excluded from the definition of ‘financial services’, reflected issues arising from a number of case studies examined. In general insurance, as demonstrated by several case studies, poor conduct included:
- Failing to handle claims in a fair and transparent manner, failing to act in an efficient, professional and practical manner, and breaching the insurer’s duty of utmost good faith;
- Delays in claims that resulted in consumer detriment. The cause of the insurer’s poor conduct was “was largely attributed to its internal systems and processes for handling claims and dispute arising from those claims”.
Further, the Commissioner highlighted several instances where insurers fell below community standards and expectations, these included:
- Implementing an inadequate system to train case managers and inadequate systems to oversee the actions of case managers; and
- A lack of robust systems to avoid potential conflicts of interest; and
- A failure to have adequate systems in place to ensure that its Internal Dispute Office conducted a robust analysis of declined claims, in a way that was independent of the claims team; and
- A failure to engage with external dispute resolution in a frank and cooperative way
Proposed regulatory change to support claims as a financial service
In implementing the Royal Commission’s Recommendation 4.8, Treasury proposes a two-pronged approach:
1. Remove Regulation 7.1.33; and
2. Use existing legislative powers to define the activity of handling or settling an insurance claim as a ‘financial service’ for the Corporations Act’s purposes.
The proposed regulatory change applies to insurers and third-party representatives of insurers that provide claims handling service.
The requirements that could apply differently depending on the type of advice provided (general versus personal) and the insurance product. Examples of provisions that could apply include:
- general obligations on an AFS licensee that apply to the financial services that it provides;
- providing a Financial Services Guide;
- general advice warnings;
- conduct obligations (which apply to the provision of personal advice to retail clients);
- conflicted remuneration;
- providing a Statement of Advice when providing personal advice to retail clients; and
- training obligations.
Supervision in the claims decision-making process reduces unsubstantiated claim rejections and discrimination. To support compliant claims process and fair customer outcomes AI & Big data analytics can provide appropriate oversight and transparency mechanisms. A systemic approach is required to establish compliance and conduct risk for adequate supervision.
As a first step, establish and document the system of internal controls and processes that requires supervision. The supervision process should include the complete customer engagement lifecycle depending on the compliance requirement and the role the entity plays in the value chain. This may consist of sales, support, claims, complaints.
One of the significant causes of claim-related disputes is information asymmetry and customers not meeting disclosure requirements which can be avoided in the policy sales by agents with improved supervision. Below are some of the critical steps in establishing a compliance and conduct risk management process.
- Identify Policies & Obligations: An effective internal controls system typically includes a centralized documented inventory of key processes and policies and of the controls. To support a risk-based supervision model, identify risk for each of the compliance and conduct requirements. Since Insurers will anticipate risks from customer’s day-to-day communication monitoring, consider the impact of the changes in risk dynamics.
- Control Automation: Review manual supervision process. Augment the manual process with AI-based automation. Improve operational model to support risk automation strategies.
- Reporting: Enable incident and breach management with continuous control monitoring to support the predictive decision-making process
- Remediation: Support an ongoing improvement process with risk mitigation strategies
RG 271 will replace RG 165 and takes effect for complaints received from 5 October 2021. It has several new requirements that are enforceable and other guidance to assist financial firms in complying with their legal obligations. Below are some of the highlights
- The complaint’s definition should include complaints made on a social media channel or account owned or controlled by the financial firm that is the subject of the post, where the author is both identifiable and contactable.
- ASIC has reduced the times allowed for responding to complaints.
- When a financial firm rejects or partially rejects a complaint, the IDR response must set out the decision’s reasons.
- When a customer advocate reviews a complaint following an IDR response, the total time spent dealing with the complaint must not exceed the relevant maximum IDR timeframe. The total time includes both the IDR process and the customer advocate review.
- The guide also includes enforceable requirements around how systemic issues should be managed and clarifies that setting the accountabilities for complaints handling and managing systemic issues is a board responsibility.
The updated guide is intended not only to improve the quality of internal complaint resolution but will enable financial firms to deliver better outcomes for consumers and reduce the need to escalate complaints to AFCA.
IDR is the key to early resolution, which benefits consumers, financial firms, and the financial sector broadly. At the same time, most financial firms have developed the IDR process; more progress is needed in several key areas to create and maintain positive complaint management cultures that welcome complaints and focus on fair and timely consumer outcomes. It can start with a current state review of KPI, Process, People, Technology.
Designing or improving an IDR process is as simple as asking some simple questions and setting the goal.
- What data do we need to capture the complaint information and support an efficient, fair, and compliant process?
- How do we identify and record customer concerns and complaints?
- What should be our IDR response & how do we achieve an early resolution?
- How do we prevent escalation and support EDR?
- How do we achieve compliance and prevent systemic issues?
- What can we learn from complaints and enable a feedback loop with product design & distribution?
- What do we need to report to enable an efficient decision-making process and management accountability?
With clear goals, the right technology, and the right people on hand, the above questions can be answered pretty quickly.
Setting the IDR foundation
To develop and maintain a positive complaint management culture, financial firms should have a robust IDR process, including all procedures, documents, policies, resources, governance, and arrangements to manage complaints.
Capturing the correct information is an essential first step in resolving the disputes promptly, responding to the customers with the required information, and also supporting the governance requirements.
ASIC has adopted the AS/NZS 10002:2014 definition of ‘complaint’ as: “[An expression] of dissatisfaction made to or about an organization, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.”
So firms need to start with an organization-wide understanding of the definition of ‘complaint’ and the types of matters that must be dealt with in a firm’s IDR process. AS/NZS 10002:2014 is an excellent standard that can be referred to.
Additional metadata must be considered to align with AFCA’s resolution process and to support EDR.
Monitor social media & other customer communication channels
Communication monitoring should not be limited to the Contact center and must include all customer communication channels, including Social media, Emails, and chatbots.
The new regulation requires social media monitoring where the social media channel or account owned or controlled by the financial firm is the subject of the post, where the author is both identifiable and contactable. Through monitoring, you can spot concerns and complaints and respond more efficiently, providing excellent customer care and compliance with RG 271.
Identify customer concerns & complaints early.
Firms need to identify customer concerns at an early stage instead of waiting for situations to be escalated and customers lodging complaints. Monitoring customer communication channels, including the contact center to identify customer concerns early, allows firms to resolve them proactively, concerns becoming complaints or complaints escalated to AFCA.
To identify customer concerns early, the most important question to ask what keywords/phrases to look for. Some examples of customer concerns: “I’m switching to…” “I’m not happy with” “cancel the account,” “close account,” “cancel service,” “stop service,” “incorrect fees,” “bad service.”
By creating an inventory of such “topics of interest” through metrics can help in prioritization. These topics should also include any potential areas that relate to systemic issues.
As a customer-focused organization, listening should be one of the key brand values. But sometimes, in the hustle and bustle of calls, the listening aspect can be overlooked.
Speech analytics can help identify the root cause of customer dissatisfaction and help you understand whether your call agents are focusing on listening. Also, it can help in determining how your agents are handling your customers and their issues. By identifying the reasons for customer dissatisfaction early, you can address the potential problems and encourage your customers to stay loyal.
First-call resolution (FCR) is an important contact center metrics and the element of customer relationship management (CRM). The term is self-explanatory: a contact center’s ability to resolve customer concerns, questions, or needs the first time they call, with no follow-up required.
It may sound a lot considering the volume of calls, but speech analytics can categorize the calls which require urgent attention. Categorization is the automatic tagging of certain language patterns, keywords, phrases, or other customer concern and complaint related characteristics. Categories allow you to find, count, and trend call that contains these characteristics.
IDR response & resolution
The update to RG 165 was also encouraged by the findings from ASIC’s on-site surveillance of the IDR process observed at some of the large firms, which had initially commenced to monitor whether they were complying with their regulatory requirements. The monitoring encouraged more stringent procedures for IDR after ASIC monitors found significant “deficiencies” and “delays” in the banks’ disputes and complaints processes.
Supporting the swift decision-making process
Whether it is a complex claims related dispute or a simple incorrect fee charged, the IDR processes should work efficiently and be capable of responding to each complaint in a timely and flexible manner. Firms should actively encourage staff to resolve complaints, wherever possible, at the first point of contact, including meeting the maximum IDR timeframes.
First call resolution is the important metric of customer care. The last thing your customers want is to be passed from agent to supervisor, back to another agent in another team, and so on.
Handling a complex case
Building a knowledge center and empowering your agents to take on more responsibility for resolving issues will help. So will call center features such as chat – giving agents the ability to ask a subject matter expert for solutions whilst still on the phone to the customer.
Besides the internal knowledge base, there is so much that can be learned from AFCA’s historical complaints data. AFCA makes some of this information available through its determination search publicly.
Cognitive View also has a developed an independent service called AFCA Insights “Analytics as a Service” that allows you to learn and gain a deeper understanding of historical financial disputes, AFCA’s decision-making approach, systemic issues, and actionable insights that you can learn from industry.
Responding to the customer
Both how and when the financial firm responds to complaints are enforceable as part of updated guideline. It should acknowledge receipt of each complaint promptly i.e. within 24 hours (or one business day) of receiving it, or as soon as practicable. And the final outcome of their complaint at IDR should include a lot more details and the options if the customer willing to take this up further with AFCA;
The maximum timeframe to respond to standard complaints will be no later than 30 calendar days after receiving the complaint (a reduction from the existing 45 days). These changes are designed to improve customer outcomes by reducing complaint handling delays by providing fair, timely, and efficient resolution of complaints about customers.
A successful complaint resolution with AFCA requires learning from the fundamental principles of AFCA’s complaint resolution approach and embedding them as part of your customer support, IDR, EDR, and compliance monitoring processes. It can start with a review process. This review should cover:
- Benchmarking the firm’s complaints processes from end-to-end, making sure that all aspects of
- performance is captured
- Reviewing the firm’s performance against industry best practice, ensuring specific, meaningful,
- and realistic comparisons and recommendations, enabling robust analysis and a clear path to
- change, if needed
- Looking at overall customer journey and processes, rather than organizational silos
- Thorough reporting on performance and compliance to help identify constraints and evaluate
- potential for improvement on an ongoing basis
- Each firm will have its view on what AFCA referral rate is satisfactory but the lower this is, the better.
RG 271 requires clear accountabilities for the complaint-handling function to be in place as well as in-depth, board-level visibility of complaints. Many organizations do not have a clear link between compliance and complaints. The systems should support risk-based control automation and remediation. Below are some of the considerations that the risk and compliance team needs to make.
Identify obligations and policies that can be monitored
To monitor the IDR & EDR control effectively for compliance & conduct risk, firms need to consider monitoring:
- Legal obligations
- Applicable industry code of conduct or guidance
- Contractual obligations & disclosure requirements
- Company policies including consumer fairness
Identify gaps that may result in systemic issues.
A systemic issue is one that has been raised in a complaint or several complaints or is otherwise identified by information obtained by, or provided to, AFCA that is likely to affect a class of persons beyond any person who lodged a complaint or raised a concern. Several complaints of the same type or a single complaint may raise a systemic issue, provided that the effect of the issue may clearly extend beyond a single Complainant.
- An inadequate disclosure document
- A documented procedure that does not comply with legal requirements, for example, permits privacy requirements to be breached
- A repeated complaint of a certain type highlights a procedural weakness that is liable to recur
- Receipt of several new complaints about the same issue
- Where the issue that affected the parties to the complaint could have affected others in a similar way
- Where the complainant claims the issue affected others in a similar way
Monitoring outsourced IDR processes.
Some financial firms outsource part, or all, of their IDR process. Outsourcing might be to external parties or to other entities within a related corporate group. According to an enforceable RG 271.48 financial firm that outsources part, or all, of its IDR process remains responsible for ensuring that the service provider’s IDR processes comply with all the requirements in this regulatory guide.
Learning from customer complaints
Complaints can help firms support individual customers and provide insight into product and service improvements, and identify broader issues with compliance programs, internal controls, communications, and processes. Complaints can be turned into constructive opportunities in
- Identifying vital areas for service improvement.
- Identifying needed improvement in policies and procedures.
- Improve customer communication.
- Improve product design and distribution gaps
- Meeting compliance: as part of the product design & distribution regulatory obligation (RG 274), Issuers and distributors must implement and maintain robust and effective product governance and monitoring arrangements to monitor managing risk complaints.
- Identifying systemic risk
Reporting & Actionable insights should go beyond the IDR team and needs to be customized and include some of the below roles
- Product management & fund administrators
- Complaints handling teams
- Member-facing staff
- Service providers
- Risk and compliance
- CEO/senior management
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Previously, claims handling and settling services for insurance products were excluded from the definition of a ‘financial service’. This exclusion was removed as part of the Government’s response to the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
From 1 January 2022, if you carry on a business in Australia of providing claims handling and settling services and you belong to certain prescribed categories, you must hold an AFS licence authorising you to provide such services (a ‘claims handling authorisation’) or be authorised by a person who holds claims handling authorisation (unless an exemption applies).
Who is this relevant to?
Some of these changes introduce multiple challenges in operational risk management. Customers’ expectations in terms of turnaround time, and omni-channel access continue to increase. Further, increase of compliance burden will continue to erode profitability. Claims processing involves several managerial, administrative and customer service functions that perform information-intensive manual tasks to protect the company against fraud or compliance errors.
Compliance is a necessity as new policies and regulations are constantly being introduced, making it difficult to keep up with changing regulations while executing efficient processes.
With the company’s standards of service and its commitment to customers at stake, the scope for errors is next to none and the price of accurate claims processing cannot be underestimated. There is a greater need to consider automation to combat these challenges.
Claims Process Automation
The insurance-claims journey—from prevention to loss notification, to assessment, to handling and settlement—has historically been opaque and confusing to customers. They have paid in advance for an abstract product, a policy to defend against risk, and at the “moment of truth” when they want to recoup a loss, they are faced with a complex, cumbersome, often very time consuming and iterative process.
Claims processing is much data and document-intensive. It needs you to collect a vast amount of information from varying sources. A claim process that is manual and lengthy can create trouble for both customer service and operations.
RPA is a process automation technology that can help the insurers in easily gathering data from various sources to be used at the centralized documents so that the claims can be processed in a much faster pace. What’s required is process automation technology that enables companies to scale human decision-making and apply it to use cases that involve hundreds of thousands of complex documents consisting of long-form text, tables, images and more. Dealing with this unstructured data is where the real opportunity lies in terms of achieving true effectiveness of the process automation.
As part of the new regulatory requirements, a detailed review of the claims value chain should be conducted to identify who may be captured, for what activities, and how they will identify, communicate with and ultimately train and supervise those who are their representatives. This will mean that additional compliance requirements may apply to small businesses such as smash repairers and builders, who will be largely unprepared for higher levels of oversight.
Supervision & Communication Monitoring Automation
Below are some of the areas where supervision and communication monitoring can be used to support Insurance claims handling as a financial service.
Claimants experiencing vulnerability or financial hardship
The vulnerability may arise from a range of factors such as age, disability, mental health, physical health, family violence, language barriers, literacy, cultural background, Aboriginal or Torres Strait Islander status, remote location or financial distress. To address these gaps companies need to establish policies and conduct guidelines to handle and settle claims efficiently, honestly and fairly, but also making it mandatory to use it as a foundation for control automation. Insurance industry codes provide useful indicators of what industry considers to be appropriate strategies for dealing with consumers experiencing vulnerability. These include:
- recognise a person’s vulnerability
- identify factors that contribute to vulnerability in your policyholders and how you will tailor the claims process for the needs of those consumers
- training your representatives on how to proactively identify if a person is experiencing vulnerability or financial hardship, and not rely on a person to self-identify this
- ensuring your representatives are trained on your policies and that you monitor compliance with those policies
Although training of staff is already part of many organization’s processes, organizations find consistent gaps in adherence to these policies. Incentives and performance measurements for claims handling staff and management creates conflicts of interest, so continuous review is required for the adequacy of these processes.
Industry codes typically set out obligations for subscribers about:
- completing stages of claims handling and settling within certain timeframes
- making relevant requests for information
- explaining the claims process to claimants, keeping them informed during claims assessment, outlining reasons for decisions and how to access dispute resolution, and
- identifying and responding to consumers who are experiencing vulnerability or financial hardship.
The relevant insurance codes of practice are:
- Life Insurance Code of Practice
- Insurance in Superannuation Voluntary Code of Practice
- General Insurance Code of Practice, and
- Insurance Brokers Code of Practice.
It is important to establish internal processes and guidance for staff and will monitor compliance with these processes based on relevant industry’s code of practice. Monitoring the code compliance will ensure claims are handled efficiently, honestly and fairly with the service standards and timeframes.
As part of the AFS licensee requirements to satisfy this obligation, there is a need to handle and settle insurance claims:
• in a timely way
• in the least onerous and intrusive way possible
• fairly and transparently, and
• in a way that supports consumers, particularly ones who are experiencing vulnerability or financial hardship.
It is possible that many claims service suppliers and other agents acting on behalf of insurers may seek to become authorised representatives of insurers rather than going through the process of obtaining their own AFSL. Insurers will need to consider their obligations to train, monitor and supervise the conduct of such authorised representatives, and the significant additional compliance that may entail. Leveraging technology to automate the supervision process will help in
- verifying compliance and detect any non-compliance (e.g. which obligations have breached and monitor key indicators of quality and performance)
- investigate, assess and escalate reports of non-compliance
- deal with non-compliance (e.g. train the representative, change processes to ensure future compliance and monitor processes to ensure they are operating effectively), and
- remediate claimants who have been harmed by the non-compliance (e.g. refer the claimant to another representative), regardless of whether or not the claimant was aware of the non-compliance.
Below are some of the top disputes for claims lodged at AFCA(Australian Financial Complaints Authority). Denial of claim is one of the top dispute issues in the General insurance category.
Denial of your claim-related disputes may happen based on a variety of reasons. For example, it could be based on non-disclosure of a pre-existing condition or exclusion; driving under the influence; where loss or damage occurred as the result of a breach of the insurance policy or an excluded event (such as flood where flood is excluded); where the claim is alleged to be false or fraudulent; where the policy is claimed to be lapsed or cancelled; where you have been unable to prove that the loss has occurred or that the goods damaged or lost were yours.
Many firms have invested in CRM/Complaints management technologies and established dispute resolution processes. Identifying customer concerns & complaints early in the claim process provides insurers with an opportunity to resolve before it gets escalated to AFCA. Setting the right expectations with the customer and proactive communication also creates a good claims experience. Compliance needs to be considered as part of the claims process. Below are some of the top compliances mentioned in AFCA’s claim related disputes.
Decision-making process for complex claims and claim-related disputes supported by external data sources like AFCA Insights gives an opportunity for claim assessor and IDR team to make the right decisions but learn from others.
Risk-based supervision is largely outcomes and principles-based compared to a compliance-based approach. It seeks to assess, within a forward-looking perspective and making extensive use of judgment, the most important prudential and conduct risks posed by firms to supervisory objectives and the extent to which firms are able to manage and contain these.
Supervisors are mostly resource-constrained and requiring them to prioritize a variety of code compliance & conduct related activities rigorously. Risk-based supervision increases the effectiveness of compliance while increasing efficiency through improved resource allocation and processes. It assists in prioritization of resources to the areas of greatest conduct risk. Risks are not eliminated, but supervisors are able to address them in the most efficient and effective way of pursuing their objectives. This allows banks to address the risks in a systematic manner giving priority to what matters most.
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- Strategy whitepaper control automation to support Insurance claims handling as a financial service
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