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Tuesday, December 5, 2017

Property Insurance - Australia - glitch due to usage of technology

Australia's insurance market can be divided into roughly three components: life insurance, general insurance and health insurance. These markets are fairly distinct, with most larger insurers focusing on only one type, although in recent times several of these companies have broadened their scope into more general financial services, and have faced competition from banks and subsidiaries of foreign financial conglomerates.  That is more or less the scenario in India also.

Is there a better way of representing what Insurance sellers call ‘bumper-to-bumper’ cover in India.  Read elsewhere that - Motorists in NSW and Victoria have more nose-to-tail crashes than drivers in the rest of the country, representing one in five insurance claims in their state.

In Australia too, there is Fire insurance policy and the standard  insured perils are: fire, storm, lightning, explosion, impact damage and earthquake.  Though uncommon here, there is requirement of coverage against ‘bush fire’, which are but reality there.   Renowned for hot summers means that Australia is also prone to bushfires which means that having adequate bushfire insurance is a priority for many. While cover for fire is standard in most home and contents insurance, many negate to check if their home is covered for natural disasters like bushfires.

Over there, the Sum insured for each House for each Occurrence is shown in the Coverage Summary.  Interestingly, there this special feature of ‘Inflation protection’ -  the SI gets enhanced daily to take care fo inflation.  In the event of a loss, the Sum insured will include any increase in the Consumer Price Index  from policy inception to material date !

Now read this interesting newsitem in today’s Sydney Morning Herald :  One of Australia's largest home and contents insurers has suspended a new online feature that made private details about the security of peoples' homes publicly accessible, including whether monitored alarm systems were installed on their premises.

Suncorp's insurance arm, which includes AAMI, recently launched a new online feature designed to "make it easy" for consumers to obtain home and contents insurance quotes for their houses by filling out an online form. But some of the answers to questions about homes were pre-populated, or pre-filled, based on past quotes filled in by customers (or potential customers), building records, or locations, sparking customer concerns about the privacy of their homes being exposed by anyone putting in their address.

Details exposed included whether a house had deadlocks, key-operated locks on windows, and burglar alarms and smoke detectors (monitored or not). This angered privacy advocates, who said it would be a treasure trove to criminals who wanted to break into homes that had weaker security systems in place. 

It was revealed that when there was Q for quote of a recognised building, it revealed pre-filled potentially sensitive security data. Given consumers did not have to prove they were the homeowner of an address, this further alarmed concerned customers, who complained directly to the company and on social media.  When this was brought to the notice of the Insurer through twitter, they responded with thanks for bringing to attention ! – another customer called the company seeking to have her details removed.  

While the Company thought that by adding the pre-populated information  "based on data  collected from customer quotes lodged over the years, the customers did not see it the same way and cried on their personal information getting spilt. Comment was sought from the privacy commissioner  as to whether it would pursue an "own motion" investigation. SMH further reports that this is not the first time AAMI has run into trouble with privacy issues. In 2013 one of AAMI's managers failed to use the BCC feature in an email the day she sent a message to 110 private addresses. Even worse than releasing private email addresses, the message went to all the people who had ongoing disputes against AAMI with the Financial Ombudsman Service, accidentally uniting a group of people, already very unhappy with one of Australia's largest insurers. Putting them accidentally in touch with one another then saw them explore the possibility of launching a class action.

To their credit, AAMI appears to have responded to the initial concern very quickly and pulled the service down within a single business day so they deserve some positive recognition there. Last Thursday in the US, Mr Hunt testified before Congress as an expert on cybersecurity about the impact of data breaches. The hearing looked at the current challenges facing identity verification and the prevalence of how data breaches are having a serious impact on that.

With regards – S. Sampathkumar

5th Dec 2017.

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