ASIC has resisted calls to release the names of life insurers it has identified as having high levels of denied claims but has stated it is keen to do so and is working on a new reporting system as a high priority.
The corporate regulator was also reluctant to draw distinct comparisons between the levels of claims identified and the firms involved stating the numbers were unreliable due to different ways in which life insurers had reported claims numbers to ASIC.
ASIC’s reluctance to name life insurers came only days after it publicised the industry average for denied claims as well as figures for unnamed insurers that had much higher levels of denied claims as part of a review which examined three years of claims data supplied by life insurers.
The pressure to release the names was applied by members of the House of Representatives Economics Committee (HREC) when ASIC appeared before it late last week.
HREC Deputy Chair and Member for Kingsford Smith, Matt Thistlethwaite, questioned why there were a number of life insurers with outlying statistics compared to industry averages around TPD and trauma claims who were not identified in the report, claiming consumers were entitled to know the names of the insurers.
ASIC Deputy Chair Peter Kell said the reason partly lay with ASIC’s information gather powers but also criticised insurers for using different methods to measure denied and approved claims.
“We are not releasing the identification around particular insurers in relation to these measures at this particular time. We are very keen to do so and we want a public reporting regime in place but one of the key issues we identified when we undertook the review was the categorisation of claims handling performance is not consistent across the industry,” Kell said.
“The way in which insurers are categorising denied claims, withdrawn claims, disputes or the time taken to deal with claims is not consistent. That is clearly a problem and is one we are going to fix in working with APRA, so we don’t want to put out information right now that may turn out to be inaccurate or that may result in inaccurate comparisons across insurers.”
“The way in which insurers are categorising denied claims…is not consistent. That is clearly a problem…”
Kell said ASIC was also restricted from publicising names of companies due to the fact that information was collected under the regulator’s compulsory powers and it was not able to reveal names under confidentiality arrangements.
“We are following up with all insurers, taking follow-up surveillance and investigatory action, with all insurers who at this stage have indicators of high denial rates to see what is behind those rates and to see whether there are problems and to identify if any consumers are being harmed. We will take action if necessary,” he said.
Kell also denied ASIC was in breach of its own charter to provide consumer protection stating that it was in the process of setting up a world leading, transparent, public reporting framework for claims reporting and this was the first and highest priority to come out of the review.
“There will be no other jurisdiction on the planet that will have the degree of transparency we are talking about and it is a very high priority to get that in place, but we do not want to put information out now that is comparing apples with oranges and that may lead consumers to make decisions that turn out to be the wrong decisions,” Kell stated.
“We are all keen to get that information out as soon as possible but we want to make sure it is accurate and comparable information.”
ASIC Chair, Greg Medcraft pointed out that while the regulator was obliged to make information public as soon as possible in its role as company’s registrar it also had a legal obligation to not release commercially sensitive information collected during reviews.
He also stated that consumers could directly approach life insurance companies to request claims management data which should be made freely available to them.
Mr Kell, seriously….your not fair dinkum !
You didn’t adopt the same attitude towards Life insurance advisers. You used a small number of recalcitrant advisers as the blueprint to tarnish all advisers in risk insurance for “churning”, at the behest of those same FSC members you won’t name.
You and they haven’t or can’t even define what your interpretation of “churning ” is but let’s go after advisers,….. the easy targets… the sitting ducks.
There are many reasons why a number of clients don’t want to stay with their present insurer. One is abnormal premium increases from one year to the next. Some are because clients are not confident after hearing that those reported in the press would prefer to delay or not pay claims altogether….. and you want to protect these recalcitrant Life companies.
Here’s a good idea, why don’t you go and approach all those good insurance advisers that you’ve decided have no other motive to look after a client other than their own self interest and see how many have had to go to ACA, 60 Minutes or a good lawyer to get a claim settled.
Well said Alleycat. In another article in this riskinfo edition, it has been confirmed by FOS that of the 20,298 of complaints made in the 2015/16 year, only 5% are for life insurance and furthermore, only 7 – 8% of this 5% relate to financial advisers!
And yet it is the specialist risk writer who for some reason has been under this constant attack. May I suggest that those of us in contact with our local members, make them aware of these independent statistics.
Agreed Alleycat, FSC members are the clear culprits time and again. Too bad advisers are such easy targets/scapegoats. And sad to see ASIC covers up the very people who ARE the problem. ASIC clearly needs a big shakeup and clean out, what about it Turnbull? bahaha, no chance there!
Watch the inquiry disappear altogether when the LIF legislation passes in parliament
No more distractions required
We have been saying for years that if you want the right answer, you have to ask the
right question and demand accurate data.
ASIC are being led on a merry go round by Insurers who deliberately manipulate the
figures to suit themselves.
There seems to be a consistent, inconsistency around data and the categorisation of
data, including the relevance of information provided.
Does the churn fiasco sound familiar?
Life Companies through their mouthpiece the FSC, manipulated data to suit themselves, with no quantifiable analysis for them to be held accountable and who then
refuse to discuss how they attained the data to come up with their conclusion that all the Life Industry problems, are the advisers fault.
Telling consumers that they could directly approach Life Companies to attain data may
be difficult considering ASIC find it a maze to get through.
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