The Insurance Code deals with three situations of policyholder hardship:
- Policyholder is in urgent financial need;
- Policyholder owes an insurer;
- Policyholder is vulnerable
1. Policyholder is in urgent financial need
Where a policyholder has made a claim, is in ‘urgent financial need’, and can demonstrate the urgency of their situation, an insurer A document that sets out what a person wants to happen to their money and other property after they die. fast-track the assessment and payment of the claim or make an advance payment or both (pt 8 Insurance Code).
2. Policyholder owes an insurer
Where a policyholder or other A person or organisation directly involved in a court case. Parties include the plaintiff or applicant, the defendant, and any third party added to the action, but not independent witnesses. is indebted to an insurer (but not in respect of the premium) – for example, a policyholder who is having difficulty paying an The amount a person does not get back from the insurer when they make a claim on their insurance. For example, if a car is insured for an agreed value of $10 000 with an excess of $1000, the insurer will pay only $9000 on a claim if the car is written off., or a third party from whom an insurer is seeking to recover money is suffering financial hardship – an insurer will consider providing assistance by modifying the terms of payment, or waiving or discharging the Money that is owed by one person or business to another. (pt 10 Insurance Code).
3. Policyholder is vulnerable
Insurers are committed to taking extra care of vulnerable policyholders. Part 9 of the Insurance Code sets out a range of factors that may give rise to vulnerability, including age, disability, language, family violence, and remote location. Insurers are required to have policies to support vulnerable policyholders.
Insurance CLAIMS AND COVID-19
As a result of the COVID-19 pandemic, there has been a significant increase in insurance claims for travel and business interruptions. Many policyholders have been disappointed by the rejection of their claims by insurers.
The law in relation to such policies is uncertain. In July 2020, the Insurance Council of Australia and the Australian Financial Complaints Authority filed a test case in a superior An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate. in Australia to seek an authoritative decision on the operation of business-interruption policies and how these claims should be managed by insurers. Other test cases are likely to follow.