Motorists Stumble Into the Auto Insurance Disclosure Entice – Sydney Morning Herald

If a driver has an accident and makes a claim on his fully comprehensive insurance, his insurer always checks the information at the time the driver took out the insurance. The insurer is entitled to refuse any claim if it is not reported.

According to MacRae, there are many reasons why motorists fall into the secrecy trap.

Often we cannot find any information, are in a hurry and sometimes answer questions on behalf of others, for example a spouse who also drives the car. Or we just forget things, he says.

“Sometimes we may not understand a question or we may be a minority lying because we fear that the truth may cost more or that we won't get any coverage at all,” he says.

MacRae says the problem is much bigger than AFCA's numbers suggest, as many people feel they are covered by their fully comprehensive insurance but have no accidents and are making claims that they would find out are not insured.

There are also those who make a claim and get denied for non-disclosure but don't argue with their insurer or escalate their claim with the AFCA, he says.

The Banking Royal Commission identified ambiguous disclosure issues as a serious issue in its final report and stated that insurers are better able than consumers to identify the categories of information they consider relevant to their decision to insure a particular risk.

The Commission recommended – and the government later implemented it – replacing the disclosure requirement with the requirement to use “reasonable care” to avoid misrepresentation.

This is a positive change as it relieves the insurer of having to ask clearer questions to consumers when getting the information they want, the report said.

"However, the new obligation will not eliminate the problem of drivers … This is because insurers will continue to rely on people's incomplete memory or arbitrary personal record," it says.

The FRLC is calling on state and territory governments, as well as road and transport authorities, to work with insurers to create an Australian version of the UK's MyLicence program.


MyLicence contains license information for registered drivers in the UK. The system is only accessible to insurers when they make an offer to an individual, but individuals can view the data held about them through another system.

British drivers simply provide their driver's license number when taking out insurance instead of answering questions about previous driving violations or license disqualifications.

A similar Australian regime would have to address privacy and security concerns and should not include a criminal record, medical records or financial information, says the FRLC. In addition, consumers would have to agree to the insurer to access the database.

FRLC says consumer data law, which aims to encourage competition between companies in the financial services, energy and telecommunications sectors, should be extended to general insurance such as auto insurance.

As part of consumer data law, customers have their data stored centrally so that when the new provider changes provider, they can access the data – if the customers agree – without having to dig up all the information themselves.

Consumer research commissioned by the FRLC found that 71 percent of Australians would like to share their driving history with insurers, and 73 percent said they would be comfortable sharing their insurance claims.

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