General insurance sector urged to combat financial abuse
General insurance sector urged to combat financial abuse | Insurance Business Australia
Insurance News
General insurance sector urged to combat financial abuse
Framework introduced to shield against financial abuse and bolster victim support
Insurance News
By
Roxanne Libatique
The Centre for Women’s Economic Safety (CWES) has introduced a report urging the general insurance sector in Australia to innovate and restructure its offerings to safeguard against the misuse in situations of domestic violence.
The CWES Designed to Disrupt report introduces a “Financial Safety by Design” framework aimed at preventing insurance products from being exploited for financial abuse.
“We are seeing abusers use a range of tactics to manipulate insurance products to cause harm, including vehicle, home and contents, and personal insurance products,” she CWES CEO Rebecca Glenn. “For example, perpetrators of abuse change or cancel joint policies without the knowledge of their partner or former partner, or redirect the payment of claims to accounts that partners do not know about or cannot access.”
Insurance used for financial abuse
The misuse of insurance by abusers encompasses unauthorised alterations or cancellations of joint policies and diverting claims payments to inaccessible accounts for the victims, primarily impacting women and leaving them financially vulnerable with no insurance recourse.
“In many cases, insurance policy terms and conditions prevent the payment of claims for damage caused by a policy holder. In instances where an abuser deliberately damages an asset covered by a joint policy, a victim-survivor may have an insurance claim denied,” Glenn said. “But there are simple steps insurers can take to assist victim-survivors of financial abuse and to prevent it from occurring in the first place.”
How general insurers could help the battle against financial abuse
To address these issues, the report proposes 19 recommendations for dialogue among Australia’s 90 general insurers, alongside governmental, regulatory, and consumer advocacy bodies.
It advocates for policy reforms to prevent unilateral policy cancellations by abusers, a “conduct of others” clause for claims involving deliberate damage by perpetrators, and an overhaul of the General Insurance Act to incorporate anti-abuse measures.
Authored by Catherine Fitzpatrick, an adjunct associate professor at UNSW School of Social Sciences, the report criticises the general insurance sector for its uneven approach to protecting victims of domestic and financial abuse.
“The Insurance Contracts Act needs to be modernised to strike a fairer deal for victim-survivors and create consistency across the sector, with a clear framework for insurance companies already working hard to update their policies, processes, and practices to improve customer outcomes,” she said. “If the law can contemplate foreseeable risks like floods, it could reasonably include the risk of domestic and financial abuse.”
Echoing the report’s sentiments, Dr Domenique Meyrick, co-CEO of Financial Counselling Australia, highlighted the significance of the findings, reflecting the realities observed in financial counselling.
“There’s so much that the insurance sector can do to prevent its products from being weaponised and to support people affected by financial abuse,” she said. “The Designed to Disrupt report on general insurance promises to be a powerful catalyst for change.”
Highlighting the broader issue of economic abuse as a control tactic within domestic violence, the report underscores the extensive impact on women, with at least 1.6 million affected during their lifetime, leading to an estimated direct cost of $5.7 billion annually to victim-survivors.
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