The Australian Securities and Investments Commission (ASIC) has admitted that it has received very few complaints about insurance claims handling prior to the media controversy, which erupted in CommInsure earlier this year.
ASIC deputy chairman, Peter Kell, has told the Senate Economics Committee Scrutiny of Financial Advice inquiry that AISC had "not had a significant number of complaints about the claims end of life insurance in recent times".
In a transcript of the most recent Committee hearing released this week, Kell said ASIC "liaised with the Financial Ombudsman Service (FOS) and the Superannuation Complaints Tribunal (SCT) about those sorts of issues".
However, he said that, particularly because of this, "it has not had the same level of focus as some of the big problems we have seen at the advice end or through car dealerships".
"But, as we have said, we are now undertaking a review of industry-wide practices here to determine whether there are red flags, where there might be systemic problems and what should be done about them," Kell said.
The ASIC deputy chairman also sought to defend the manner in which the regulator was going about its review process, particularly the use of internal reviews undertaken by the insurers themselves.
He said ASIC was requesting some of the information from insurers using its compulsive information gathering powers.
"There are obviously very serious consequences if people do not comply with those quite seriously," Kell said.
He said that ASIC also expected that "some of the other participants in the industry that we will be talking to — consumer groups and whatnot — will have information that will point to potential problem areas".
"If we need to undertake investigations to follow up and obtain additional information or to undertake regulatory action, we will do so. The initial review is in some way to allow us to identify areas that may require further work, investigation, regulatory action, or even potentially law reform."