Loopholes lead to financial abuse

Insurance companies are being urged to redesign their products and practices to help prevent financial abuse.

The call comes from the Centre for Women's Economic Safety (CWES), which played an instrumental role in pushing the banking sector to adopt procedures to stem financial abuse.

A new discussion paper produced by the CWES highlights the ways in which products such as car, home and contents, and other personal insurance policies are being manipulated. Among the common types of financial abuse, victim-survivors report having their policies cancelled or changed without their knowledge and seeing claims denied after property damage was caused by an abuser.

“In many cases, insurance policy terms and conditions prevent the payment of claims for damage caused by a policyholder,” says Rebecca Glenn, the chief executive of the CWES.

“In instances where an abuser deliberately damages an asset covered by a joint policy, a victim-survivor may have an insurance claim denied. These actions may leave victim-survivors, usually women, in very difficult financial circumstances, with damaged assets and no recourse through insurance.”

To remedy the loopholes allowing financial abuse to occur, the CWES has made 19 recommendations, including that the government modernise the Insurance Act.

The paper also advocates that changes be made to ensure that policies can't be cancelled without the knowledge or consent of victim-survivors, and that claims can't be denied if property has been deliberately damaged by an abuser.