ASIC opens inquiry into AI-automated insurance claims denial patterns after consumer complaints surge

What happened

ASIC commenced an inquiry into general insurers' use of AI in claims triage and initial decision-making after a significant surge in complaints about automated claim denials. Consumer groups found patterns of AI systems denying claims without adequate human review, with denial reasons that were templated and did not reflect individual circumstances. The complaints were concentrated in flood damage claims (post-2022 flood events) where AI triage appeared to systematically under-assess structural damage.

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