Australians warned of repair scams after floods and car accidents
Anthony McGrath, IAG’s general manager of anti-fraud and intelligence, said claims management companies were operating in a “grey area” and taking advantage of “vulnerable Australians who have often had a traumatic experience”.
“They promise quick fixes or expedited, hassle-free claims, but in reality they can lead to inflated costs, unclear communication, delays and unnecessary stress,” McGrath said, urging anyone who thinks they might be dealing with such a situation to contact their insurer immediately.
NRMA insurance customer Reg Mahoney is among a growing number of Australians who unknowingly turn to a claims management company. Mahoney gave his contact and insurance information to a tow truck driver who responded to the scene after he was struck at high speed in a 2022 accident.
“Forty minutes later, I was contacted by a person who claimed to be from my insurance company and had all my information,” he said.
“They caught me at a vulnerable time when I was in shock after the accident.”
Disaster hunters are similarly predatory when it comes to home damage, McGrath said.
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“These rogue operators will often arrive uninvited at storm-damaged homes and use high-pressure sales tactics to secure low-cost, emergency repair deals,” he said. “They may claim to have identified damage to your property, ask for down payment, or even claim to be from your insurance company.” McGrath said builders or tradesmen sent by insurance companies will never ask for down payment.
Alexandra Kelly, director of casework at the Financial Rights Law Centre, said insurers could make their claims processes smoother to minimize consumer involvement with a third party dealing with a claim, but ultimately echoed IAG and other insurers’ call for stronger laws against the practices of claims management companies.
Although his center traditionally advises on cases against insurance companies, “this is one of those weird areas where we lawyers are more aligned with the insurers,” he said.
“Consumers are lured into a complex contract stipulating exorbitant rental fees, told the at-fault party will be pursued for costs, but in the fine print they may say you have to go back and pay. It could be $200 a day for a rental car, leading to bills of $10,000,” Kelly said.
Kelly said disaster hunters have been known to try to get insurance companies to pay inflated repair costs far beyond their actual value, as well as trying to take a percentage fee on claims payouts.
The Insurance Council of Australia has called for stronger regulation to shut down “predatory operators” and said “a preponderance of evidence suggests significant consumer harm”. “Not only do their practices harm individual customers, they also increase insurance costs for all Australians,” a spokesperson said.
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