CommInsure has defended its claims record stating recent media coverage was at times unfair to the insurer despite it having paid out on thousands of policies.
In its submission to the Senate Economics Reference Committee into the Scrutiny of Financial Advice, CommInsure stated it had paid out more than 22,000 claims in 2015 and while “…we believe the vast majority of claims decisions are correct, errors can occur”.
CommInsure highlighted statistics from the Financial Ombudsman Service and feedback from external benchmarking studies which it claimed showed there were no systemic concerns around the accuracy or integrity of its claims processes.
The insurer stated that an annual market study of adviser groups and industry, retail and corporate super funds by NMG Consulting found that CommInsure paid more in claims as a percentage of its premiums than the average across the industry.
It also stated the 2015 Lewers Life Insurance Intermediaries Study Australia, which is based on independent adviser feedback on life insurers, found that CommInsure was highly regarded by financial advisers for fairness and sensitivity in claims assessment.
“Some of the criticism of the industry, and our life insurance business CommInsure, has been fair and some has not.”
In a covering letter to the submission CBA, Chief Executive, Ian Narev wrote “there has been an intense focus on life insurance in recent months. Some of the criticism of the industry, and our life insurance business CommInsure, has been fair and some has not.”
Narev also stated the insurer’s investigations into five claims, which were the subject of stories by Fairfax media and Four Corners “…have not suggested any deliberate employee misconduct. If anything, in these cases there appears to have been more of a focus on process than people.”
In the covering letter Narev also stated that two of the five cases had been paid before 2015 and the remaining three cases would be paid after the insurer had taken ‘decisive and compassionate’ action to address policy issues and the related claims.
While the submission detailed the particulars of each case and CommInsure’s basis for decisions it also confirmed the policies were group life policies and not those provided via a financial adviser.
“All of these four cases were challenging to assess and our claims staff worked with the respective superannuation trustees.”
The insurer restated that it had admitted its heart attack definition was out of date and should have been revised in 2014, with about 100 CommInsure customers likely to be reassessed under the new definition.
Since the release of those stories CommInsure has updated the product disclosure statements relating to these definitions for new customers while also backdating coverage to May 2014 onwards and applying it to all claims from that time forward.
“On the basis of actuarial estimates we expect up to 100 customers will benefit from the backdating of these upgrades,” CommInsure stated in the submission.
If only these claimants had an adviser who understood the insurance contract definitions and claims process. My belief is all this would be avoided. The value of a specialist risk adviser is immeasurable. Claims is where the rubber hits the road.
Anecdotally, it appears the Lawyers are charging far greater fees being a percentage of benefit, then risk advisers. We also evidenced one situation where the Lawyer took a massive chunk of the TPD lump sum, but wouldn’t take on the IP claim as there was not enough fat in it. We took it over pro bono on request of our refererers and have had it back paid for years. It appears to me that Lawyers don’t have effective skills for managing claims as compared to good risk advisers.
My company provides this as part of our service offering. It stuns me that the majority of advisers pass this responsibility on to the insurers!!
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