The regulator found poor practices by insurers and their investigators, including interviews that felt like interrogations, with some investigators suggesting to consumers that they had fabricated their claim.

There were interviews in consumers’ homes, excessively long or successive interviews, and interviews without notice, ASIC found.

And there were onerous, unexplained and successive information requests for a wide range of documents including criminal record checks, social media histories, birth certificates, telephone and text message records, financial statements for every bank and loan account and information about family members and friends.

The regulator also found there to be inadequate support for additional needs, such as consumers with limited English literacy not being offered an interpreter.

ASIC Commissioner, Sean Hughes, said: "We found insurers are putting a significant proportion of consumers through a harmful and unreasonable process, even where their claims are ultimately paid."

The insurers reviewed in the report include Allianz,  A&G, IAG, AAI Limited and Youi.

'Like we were criminals'

Tony Mrad, 39, of Sydney knows only too well how heavy handed insurers can be. He had his car stolen from his carport in 2016 and the police later found the car that had been torched.

Mr Mrad made a claim on his comprehensive insurance only to have it denied on the basis he had not proven a loss and had not dealt with the insurer in good faith.

Mr Mrad had several policies with the insurer, NRMA, which is owned by IAG. When the claim for his car was denied he asked the insurer repeatedly to see the evidence on which the insurer had based its decision to deny the claim.

Eventually, with the assistance of the Financial Rights Legal Centre, he lodged a claim with the Financial Ombudsman Service in which the insurer was required to produce any of the documents that it had relied on in making its decision.

It took two years for the claim to be resolved. The insurer eventually agreed to pay the claim,  just prior to the Ombudsman issuing a determination.

“They interviewed me and my wife separately on two occasions, each time for more than three hours, like we were criminals,” Mr Mrad said.

“It was obvious that is was a false allegation and the insurer behaved unprofessionally,” he said.

He was even asked to pay $180 for copies of the recordings the insurer was relying on in denying his claim.

He feels that the insurer probably felt that it would be difficult for him to defend his rights and that he could not afford to pay lawyers for the claim on his stolen Toyota Corolla, worth $14,000.

“They know that they can threaten you as a big institution,” he said.

Alexandra Kelly, the Director of Casework at the Financial Rights Legal Centre, said the regulator's report "confirms the experiences that our clients tell us on our Insurance Law Service line".

“We regularly hear from consumers subjected to threats, bullying behaviour and harassment by unregulated insurance investigators," Ms Kelly said.

"Consumers endure incredibly long interviews – sometimes over five hours – routinely describe being treated like criminals, and many with poor English skills are not given access to appropriate translators," she said.

IAG has been contacted for comment.