Australia’s General Insurance Code Governance Committee (CGC) has called on motor insurers to tighten how they explain online application questions and refusal decisions, after a review of 58 motor brands across 13 insurers found material inconsistencies in transparency and communication.
The targeted review examined the end-to-end online quote and application journey for private motor cover, focusing on the questions asked, the visibility of their relevance, and the information provided when insurers decline to offer cover online.
The committee concluded that while some insurers clearly link application questions and outcomes to underwriting decisions, others ask for extensive personal information without explaining its purpose to customers or how it influences risk assessment and pricing. CGC chair Veronique Ingram said: “Customers have a right to clear, honest, and respectful communication, which is also good for business. When customers understand why insurers are asking for information, how insurers will use it, and the reasons behind a decision, it leads to a smoother more efficient experience.”
In its review, the CGC found that most insurers could explain to the committee why they collected particular data fields and how those fields fed into underwriting models. However, this rationale was often not visible to customers during the online process. Only six of the 13 insurers reviewed limited their questions to information where the relevance was clear. The remaining seven used questions whose connection to the decision to insure or the price to be charged was not obvious from the online interface.
Questions commonly flagged by the CGC included those on relationship status, employment status and occupation, home ownership, and ownership of other vehicles. Several insurers indicated they used combinations of these factors to build a broader profile of a customer’s lifestyle and insurance behaviour.
The committee accepted that such profiling could form part of a holistic risk framework, but emphasised that if the information is used to set premiums or determine eligibility, customers should be able to see how it affects them. It also noted that in some cases system design and manual workarounds made it difficult for insurers to generate tailored explanations for premiums, limiting transparency.
The review further highlighted the use of proxy data. For example, some insurers said they used employment information as a stand-in for driving frequency, even though they already captured estimates of annual kilometres driven. The CGC indicated that where direct, risk-relevant data is available, reliance on broader proxies raises questions under code provisions that require insurers to “only ask for and rely on relevant information.”
The committee also focused on questions that may carry social or financial sensitivity, such as bankruptcy history, loan defaults, and prior insurance arrangements. Three insurers reported that they asked about past bankruptcy or loan defaults and then declined cover where those events were present, citing concerns about financial instability, contract enforceability, or business impact. The CGC questioned the use of bankruptcy as an indirect indicator of future claims risk and said that if insurers choose to collect such information, they should clearly explain why it is needed, how it will be used, and provide scope for customers to explain their circumstances.
Six insurers asked applicants to name their previous motor insurer. While some were able to describe internal uses for this information, none provided a clear customer-facing explanation of why it was being collected. In at least one instance, a flat premium loading was applied solely based on the identity of the previous insurer, with no explicit link to individual risk factors.
The committee said insurers bear the onus of demonstrating that each data field in an application serves a specific and defensible underwriting or eligibility purpose. It indicated that gathering information as a matter of routine, without a clear connection to decision-making or pricing, is inconsistent with Code expectations of fairness and transparency.
A key focus of the review was how insurers communicate when they are unable to provide cover at the application stage, particularly in digital-only interactions. Under Paragraph 47 of the General Insurance Code of Practice, insurers must explain their decision when they cannot offer insurance, advise customers of their right to request the information relied upon, and outline what the customer can do next. For many customers using online channels, this refusal message may be their only contact with the insurer.
Of the 13 insurers assessed, eight met all the specified code obligations for declined applications. Five did not fully meet one or more requirements. The most common issue was the use of generic refusal language such as “eligibility requirements not met” or “you do not meet our eligibility criteria,” sometimes combined with a list of potential reasons without identifying which one applied.
By contrast, the CGC pointed to more specific statements such as, “Due to your claims history, we are unable to offer you cover,” and “[Insurer] is not able to provide car insurance due to the high value of the car,” as examples of messages that more clearly connect an outcome to a customer’s circumstances.
The committee also found that explanations of customers’ rights to request the information relied on were occasionally absent, ambiguously worded or placed in subsequent steps that not all customers would see. Some insurers, however, used clear and prominent language such as, “You have the right to ask us for the information we relied on when assessing your application.”
Several insurers advised the CGC that being ineligible for an online quote does not always amount to a refusal to insure; customers in some segments might still be able to obtain cover via call centres or intermediated channels. In practice, the committee found that this distinction was not always explained in online messaging.
Some standard refusal pages indicated that no quote could be provided, without clarifying whether that applied only to the digital channel or to the product overall. One insurer, following engagement with the CGC, updated its wording to explicitly state that while an online quote could not be issued based on the information entered, cover might still be available and provided a phone number for further discussion.
The review also found that references to internal dispute resolution and complaints processes were often omitted unless customers first indicated dissatisfaction. Other insurers embedded brief statements and links about complaints options in their refusal communications, allowing customers to act on their rights without needing to ask first.
Beyond the Code of Practice, the CGC linked its expectations to the Australian Privacy Principles (APPs), which require that personal information be collected only where necessary, on a lawful and fair basis, and accompanied by clear explanations of why the information is sought and how it will be used. Where sensitive information is involved, explicit consent is required.
The committee said insurers need to ensure that any data they collect in online motor applications is necessary, lawfully handled, and supported by plain-language customer explanations. This is particularly relevant where questions relate to previous hardship, such as bankruptcy or earlier refusals of insurance. “A simple explanation can make a big difference. Clear communication meets expectations and helps customers feel that they’ve been treated fairly in the process,” Ingram said.
The CGC has written to the insurers where it identified ongoing concerns, seeking further information and reminding them of their code commitments. It has asked those insurers to review their online forms, remove or adjust questions that are not clearly necessary, and revise refusal messages so that they explain reasons, rights, and next steps in a customer-specific way.
The committee plans to conduct a follow-up review within the next few months to assess the extent of changes made. If it concludes that insurers have not made meaningful progress on transparency, clarity, and relevance in their online motor application processes, it has indicated that it may consider further enforcement measures under its governance powers.
