Questionable expert reports – what can insurers do?

Questionable expert reports – what can insurers do? | Insurance Business Australia

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Questionable expert reports – what can insurers do?

AFCA’s ombudsmen offer guidelines

One big issue currently facing insurers is questions over the quality of their expert reports. These reports are often used to decide property claims. The Australian Financial Complaints Authority’s (AFCA’s) record number of consumer complaints has brought this issue to the forefront. Many of those complaints, said the regulator, involve these reports.

The federal government’s parliamentary inquiry into the 2022 floods is also focusing on this problem. During hearings, insurance company executives were questioned about expert reports, including issues around their quality and impartiality.

During a recent member forum, AFCA’s ombudsmen discussed this issue and what insurers can do about it.

Independence is important

“Preserving the independence of the expert that’s providing an opinion is really important,” he said.

Liamos suggested that insurers could look at putting control mechanisms in place, if they aren’t in place already, “to ensure that the expert remains impartial and independent.”

“The courts use a code of conduct that experts need to agree to, which is not a bad process,” he said.

Don’t go beyond your expertise

Another issue brought to light by claims complaints, said Liamos, is experts providing views on claims related matters that are beyond their expertise.

He suggested that this is starting to happen frequently.

“In particular, it’s important that when an expert is providing an opinion, that they confine their opinion to the issues within their expertise,” he said. “More often than not, we’re starting to see experts going outside of that and in particular providing opinions about a policy response.”

Liamos said this is usually not appropriate because these professionals are experts in specific technical areas and “not normally insurance experts.” 

“That can definitely lead to a perception that they may not be independent if they’re going outside that scope and particularly recommending a course of action [outside of their expertise] that’s adverse to one of the parties,” he said.

Opinions must have substance

Liamos said the key issue with these expert reports is their “substance.”

“This is the reasoning and the analysis that’s been provided to support the opinion made,” he said. “In most of the complaints, if not all, that’s usually the determining factor of a decision maker being persuaded by a particular opinion.”

Insurer checklist for expert reports

Liamos provided what amounted to an expert report checklist with the sorts of questions insurers should be asking about them. He said, in his opinion, this is “the key to a good expert report.”

Is the reasoning clear?
Is it logical?
Is it consistent with the available information?
Has it taken into account relevant factors?
Has it addressed rebuttal arguments raised by the other party?

The report, he said, should be “able to draw all the other pieces of evidence together through its investigation and put together a clear, cogent rational reasoning to support the opinion drawn.”

He said some of the reports that fail to meet this criteria, don’t provide clear explanations of how an opinion is reached, for example, concerning a property’s wear and tear or maintenance issues.

Record numbers of complaints

During the forum, Emma Curtis, AFCA’s lead ombudsman for insurance, said that during the past calendar year, complaints numbers increased by 20% to a record of nearly 30,000.

“There’s been really high claim volumes in response to some of those natural disasters and unfortunately, what we are seeing is that this is translating into very elevated numbers of complaints,” she said.

Curtis said this big rate of increase “looks like the new normal and we’re still seeing ongoing increases in those complaint volumes.”

One key takeaway, she suggested, is that these rising complaints are across a range of general insurance offerings and are not just natural disaster-related.

Delays in claims handling continue to be the main issue, said Curtis.

“The ICA is aware of some delays in claims processing both from catastrophes and general insurance claims; however, it must be noted the significant pressure last year’s floods put on insurers’ systems and processes, which are used to respond to all insurance claims, as well as a shortage of experts required to assess and manage claims and building and labour supply constraints,” a spokesperson said in a statement.

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