ICA analyses challenges in Australia’s cheque system phaseout
ICA analyses challenges in Australia’s cheque system phaseout | Insurance Business Australia
Insurance News
ICA analyses challenges in Australia’s cheque system phaseout
Representative body outlines barriers to seamless transition
Insurance News
By
Roxanne Libatique
The Insurance Council of Australia (ICA) has provided insights into the hurdles faced by the insurance industry during the transition away from cheques.
In its response to the Treasury’s consultation paper, “Winding down Australia’s cheques system”, the ICA said discussions with the Australian Securities and Investments Commission (ASIC) had shed light on the complexities anticipated by insurers.
The ICA acknowledged that phasing out cheques poses challenges in processing claims management, policy cancellation payments, and early payments to customers in urgent financial need. The transition is particularly intricate for remediation payments, as insurers may lack up-to-date contact details for impacted customers.
Support for transition conditions
The ICA expressed support for the conditions outlined in the consultation paper, with its members already implementing long-term solutions for retail customers, accompanied by education programs and increased customer-insurer touchpoints.
However, the representative body argued that the timeline proposed in the paper may prove challenging for insurers, given recent bank announcements regarding changes to cheque services from 2024. This necessitates an accelerated implementation schedule by insurers, aligning with banks’ transitions.
Barriers to a seamless transition
While the outlined sequencing and timing appear appropriate, the ICA highlighted potential barriers impacting the completion of the transition.
“Customers are increasingly hesitant to provide up-to-date bank account or credit card details to facilitate remediation due to scam, cyber, and fraud concerns as provision of such information usually involves the customer clicking on a link provided via email or providing details over an incoming phone call,” it said.
According to the ICA, insurers expect customer behaviour to require time to adapt to new digital solutions, with vulnerable groups, in particular, relying more on cheques and facing obstacles in embracing digital alternatives.
“Insurers are mindful that such customers affected by lower digital ability, language barriers, access to electronic devices and reliable internet connection and/or other circumstances may be difficult to identify and support if they do not respond to insurers’ multiple attempts to engage over the phone or via email,” it said. “We also highlight that customers impacted by significant weather events tend to be in more rural areas of Australia, may have limited access to online banking, and rely more on cheques to receive claims settlement payments from insurers.”
Industry-government collaboration
The ICA welcomes collaboration with the government to address challenges related to unclaimed monies and existing government cheque usage. It proposes an industry-government partnership to enhance awareness and education.
“The Insurance Council is working closely with the National Insurance Brokers Association of Australia to explore an industry-led long-term solution for broker clients that will duly consider secure storage, access, and maintenance of up-to-date customer contact and payment details to facilitate payments,” it said. “We look forward to ongoing engagement with Treasury as consultation and transition progresses.”
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
