Australia’s insurance industry is undergoing the biggest regulatory and compliance changes in its history, and these changes will significantly impact investigation teams.

The Insurance Council of Australia (ICA) has released a new General Insurance Code of Practice, and all insurers were required to implement the changes by July 1, 2021. The changes are legally binding and, as of July 1, 2021, organisations can be fined for non-compliance. These fines can amount to hundreds of thousands of dollars.

To avoid penalties and compliance headaches, insurers will need to change their business to comply with the new regulations, which must be met in their entirety, as opposed to a piecemeal approach. The new Code is a result of a two-year review by the ICA, which invited input and recommendations from various organisations.

Australia’s insurance industry leaders must act now to bring their investigation teams, and the wider organisation, in line with the changes. Investigation teams will be pressured by the more detailed compliance requirements, but this does not mean there are no business imperatives.

Polonious’ report, New General Insurance Code of Practice: A reference guide to how changes will impact fraud investigations, gives insurance industry leaders an overview of the required changes, and details of how the impending requirements can go a long way to benefiting the business.

I this blog, we will look at the main points of compliance.

Regulatory and compliance requirements are often seen as a process and reporting burden by organisations already stretched by administrative overhead. However, contrary to this common belief, the new ICA Code will help insurance companies improve customer engagement. And there is already software available to help manage the new requirements in an automated way.

The benefits of meeting compliance

When it comes to dealing with customers, meeting compliance is good for business.

Insurance investigators need to remember that an investigation is also customer service. When dealing with a customer, including them in the process leads to a much more positive experience for them.

If customers are well informed, and have clear guidelines as to what is required, not only are they more likely to remain a customer, they will also be more likely to refer the insurer to their friends, family, and colleagues.

Moreover, a well-informed investigator can recommend a settlement sooner when evidence of a genuine claim is confirmed, rather than through the regular claims process. Building the ability to “green light” a genuine claim into the investigative process is critical.

The requirements of the new Code are an opportunity for insurers to improve their investigative processes. These improvements should be baked into their investigation methodology from the outset, with compliance monitored via the tracking of progress, timeframes and the investigation plan, ensuring that the claimant is included in regular communication.

With the new rules mostly relating to the claimant, they should be viewed from claimants’ perspective in terms of benefits. This is not to say the changes don’t also ultimately benefit the insurer — by making the claims process more transparent and less time consuming for the claimant, customer satisfaction and retention will increase.

The importance of compliance monitoring

Constant compliance monitoring is necessary to ensure that fairness and due process is followed, which impacts the relationship with the customer and how it is viewed.

For example, any evidence that is gathered under non-compliant circumstances loses its weight in court.

Another benefit of compliance monitoring is a reduction in turnaround times. Shorter investigation times lead to reduced cost of the investigation and increased customer satisfaction.

With a mature investigation methodology and system in place, turnaround time for genuine claims that undergo an investigation can be reduced by 50 per cent.

This, in combination with reduced administration, has the flow-on effect of reducing the total number of open cases also by 50 per cent. One Polonious customer had 1000 cases open at the time of go-live, and within 18 months had reduced that to 500 cases despite still investigating the same total number of cases per month.

By following well-defined processes, administration costs can also be reduced by some 30 per cent, which further reduces turnaround time. In one Polonious customer review, more than two hours of admin time was saved per case. This manifested itself in a reduction in the investigation work from 14 days to 12 days. In short, two hours less administration led to a two-day saving in turnaround time.

Calculating compliance ROI

Polonious has identified more than 40 key points of compliance required to be monitored during the course of an investigation to ensure ICA standards are being met by investigative teams.

In an effort to build consensus and an agreed best-practice approach, in late 2019 Polonious started a working group with a number of leading Australian insurers to discuss how a system could be used to track all of these points of compliance and make them part of the business process.

During the course of an investigation, all of the compliance points can be met as part of the process from beginning to end, with appropriate reminders.

Table 1: The main stages of investigation workflow

Polonious has analysed numerous client investigation processes to determine the efficiencies gained after implementing the SAME methodology.

On average, the ROI at 90 days after implementation was an approximate time saving of 33 per cent, with improvements at 15 out of the 18 stages of the investigation process.

Figure 1: How Polonious saves time during an investigation