Board, AFCA, and Standards Alignment
Proof-Based Insurance (Board-Ready)
Below is a board-ready translation, followed by a direct AFCA mapping, and then a standards alignment.
Each section is written so it can be lifted directly into a board paper or risk pack with minimal editing.
1. Board-Level Risk Translation
What This Means for Directors
The Core Issue (Plain English)
The insurer’s current operating model relies on:
- documents,
- images,
- declarations,
- and human judgement.
These are no longer reliable in an AI-enabled environment.
This creates non-linear risk exposure that scales faster than existing controls.
Key Board Risks Being Addressed
1. Operational Risk
Current exposure
- Manual claims handling
- Inconsistent evidence quality
- High exception rates
- Staff-dependent decision quality
Proof-based impact
- Deterministic verification replaces interpretation
- Automation applies only where evidence is verifiable
- Exceptions are explicitly identified, not discovered late
Board takeaway
Lower loss volatility and fewer operational failures at scale.
2. Conduct & Fairness Risk
Current exposure
- Disputes over “what evidence means”
- Perceived inconsistency in claims outcomes
- Customer complaints driven by opacity
Proof-based impact
- Decisions are explainable by verification steps
- The same evidence produces the same outcome
- Appeals focus on missing or invalid proofs, not opinion
Board takeaway
Reduced conduct risk and improved defensibility of decisions.
3. Regulatory & Supervisory Risk
Current exposure
- Difficulty reconstructing decisions
- Heavy reliance on staff testimony
- Model governance reviews are time-consuming
Proof-based impact
- Every decision is reproducible
- Evidence provenance is explicit
- Supervisors can independently verify inputs
Board takeaway
Stronger supervisory confidence and lower regulatory friction.
4. Fraud & Leakage Risk
Current exposure
- Synthetic documents and images
- Post-payment fraud detection
- Increasing loss-adjustment costs
Proof-based impact
- Fraud prevented at submission, not detected later
- Invalid proofs fail automatically
- Reduced incentive for low-effort fraud attempts
Board takeaway
Structural reduction in fraud, not just better detection.
5. Strategic Risk (AI Adoption)
Current exposure
- AI adoption constrained by trust concerns
- Risk of “black box” decision-making
- Fear of regulatory pushback
Proof-based impact
- AI verifies, not decides
- Clear human accountability remains
- Automation aligned with regulator expectations
Board takeaway
Enables safe AI adoption without reputational or regulatory backlash.
One-Line Board Framing (Reusable)
This shifts insurance from judgement-based processing to verification-based control, reducing loss volatility, dispute rates, and regulatory risk while enabling safe automation.
2. Mapping to AFCA Dispute Reduction
Why AFCA Complaints Happen Today
Most AFCA insurance disputes arise from:
- evidence authenticity,
- interpretation differences,
- delayed claims handling,
- unclear reasons for denial,
- inconsistent outcomes.
These are process problems, not product problems.
Proof-Based Impact on AFCA Drivers
Evidence Authenticity
Today
- “The photo doesn’t prove damage.”
- “The document may not be valid.”
With proofs
- Evidence is issuer-signed and time-bound
- Authenticity is objective
AFCA impact
Fewer disputes about whether evidence is “real”.
Interpretation Disputes
Today
- Different assessors reach different conclusions
- Customers feel treated unfairly
With proofs
- Verification rules are consistent
- Outcomes are deterministic
AFCA impact
Reduced inconsistency-based complaints.
Delays & Process Failures
Today
- Back-and-forth requests for documents
- Long review cycles
With proofs
- Verification is immediate
- Missing proofs are identified upfront
AFCA impact
Faster resolution and fewer “delay” complaints.
Poor Explanations
Today
- “Based on our assessment…”
- Difficult to explain decisions clearly
With proofs
- “These verifications passed / failed.”
- Clear, auditable rationale
AFCA impact
Stronger explanations and higher acceptance of outcomes.
Summary AFCA Positioning
Proof-based claims handling addresses the root causes of disputes, rather than managing them after escalation.
This directly supports:
- reduced AFCA volumes,
- lower remediation costs,
- improved complaint metrics.
3. Alignment to Australian Standards & NCC
This is where proofs become regulator-grade evidence.
NCC (National Construction Code)
Current practice
- Compliance asserted via certificates and PDFs
- Difficult to validate post-construction
Proof-based alignment
- NCC compliance issued as a Construction VC
- References specific NCC clauses
- Signed by an accredited certifier
- Time-bound to construction or renovation events
Underwriting benefit
Construction risk is verifiable, not inferred.
AS 3959 — Construction in Bushfire-Prone Areas
Current practice
- BAL ratings declared or documented
- Often outdated or disputed at claim time
Proof-based alignment
- BAL assessment issued as a VC
- Includes:
- BAL rating
- Assessor identity
- Assessment date
- Re-issuance required on renovation
Claims benefit
Eliminates disputes about bushfire compliance.
AS 1851 — Maintenance of Fire Protection Systems
Current practice
- Invoices or maintenance logs
- Difficult to verify ongoing compliance
Proof-based alignment
- Maintenance events issued as Protection VCs
- Include:
- System type
- Test outcome
- Validity period
Risk benefit
Protection risk is continuously verifiable.
AS/NZS 1170 — Structural Design Actions
Current practice
- Design assumptions embedded in plans
- Rarely referenced in underwriting
Proof-based alignment
- Structural design parameters attested at build time
- Available as underwriting inputs
Portfolio benefit
Better catastrophe modelling inputs.
Standards Summary Table
| Standard | Risk Area | Proof-Based Control |
|---|---|---|
| NCC | Construction compliance | Certifier-issued VC |
| AS 3959 | Bushfire risk | BAL rating VC |
| AS 1851 | Fire protection | Maintenance VCs |
| AS/NZS 1170 | Structural resilience | Design attestation |
Final Executive Framing (Highly Reusable)
This approach aligns underwriting and claims directly to Australian standards, reduces disputes, strengthens prudential control, and enables automation without increasing conduct or regulatory risk.