Regulators Confirm High Levels of Claims Acceptance

More than 90 per cent of life insurance claims lodged during 2016 were accepted by life insurance companies, according to new data released by APRA and ASIC.

APRA Member, Geoff Summerhayes

The data revealed that of the 103,100 claims finalised in 2016, 95,000 – or 92.1 per cent – were accepted by life insurers. A further 8,100 – or 7.9 per cent claims were declined, according to the data, which was released as an industry-aggregate.

The total number of finalised claims represented 81.6 per cent of all claims reported, which totalled 126,300, of which 5.1 per cent (6,400) were withdrawn and 13.3 per cent (16,800) were undetermined at the end of 2016.

The data was collected as part of a joint research project by the two regulators to improve reporting of life insurance claims performance across the industry (see: Regulators Begin Collection of Claims Data).

Information was gathered from 16 insurers who provided approximately 12,500 unique potential data points each, across the areas of policy statistics, claims data and dispute data for term, TPD, trauma and income protection products.

“The analysis of this initial data reinforces the findings of ASIC’s Report 498…”

Commenting on the data, ASIC Deputy Chair, Peter Kell said, “The analysis of this initial data reinforces the findings of ASIC’s Report 498 that over 90 per cent of life insurance claims are paid in the first instance by insurers” (see: Direct Insurance to be Reviewed as ASIC Finds Claims Issues).

In an information paper supplied with the results, APRA noted that the data in this initial report was “…not of sufficient reliability and comparability to support entity-level publication” but was “…sufficiently robust to release publicly at an aggregate industry level”.

“Publication of aggregate level data is an important step towards achieving the objectives of this initiative, and will materially enhance transparency and inform public debate,” the paper stated.

Insurers also struggled to report all the requested data according to specified definitions and used different definitions for what constituted a reported, declined or withdrawn claim which reduced the comparability of the data, the paper added.

As a result of these differences, ASIC and APRA would, for the first time seek to formalise standard definitions used by insurers in the second round of data collection.

APRA Member, Geoff Summerhayes said, “We are now focusing on the ability of insurers to report according to these common definitions, including how they can do their best to manage system constraints. While significant progress has been made, there is still more work to be done to fully embed the definitions across the industry”.