Advised life insurance has a higher rate of admitted claims than non-advised insurance across all four product types, according to new data released by ASIC and APRA.
The two regulators released the data as part of the second phase of an ongoing project to collect and analyse claims data from all life insurers to establish a consistent public reporting regime for claims outcomes (see: Regulators Begin Collection of Claims Data).
The data, which covered life insurance claims and claims related disputes for the period 1 January 2017 to 30 June 2017, found the admittance rate for advised insurance for death cover was 98 per cent compared with non-advised at 88 per cent.
Similar figures were reported for Income Protection cover with admittance rates for advised insurance at 95 per cent compared with 83 per cent for non-advised insurance. The gap closed with trauma insurance where the advised insurance admittance rate was 87 per cent compared to the non-advised rate of 84 per cent.
The difference for TPD cover was much wider with advised insurance having an admittance rate of 86 per cent compared to 67 per cent for non-advised cover, however, the regulators stated there was a relatively low level of claims in the non-advised area which would contribute to more volatility in results.
The data released by ASIC and APRA also showed that group life admittance levels were very high, and on par with advised life insurance in the areas of death cover (98 per cent), TPD (84 per cent) and Income Protection (96 per cent). Figures for Trauma cover were not released due to the small volume of claims reported in the group life sector.
The data also found that more than 90 per cent of claims that go to decision are paid in the first instance, echoing similar findings from the first phase of the data collection project (see: Regulators Confirm High Levels of Claims Acceptance).
Specifically, ASIC and APRA found that 97 per cent of death claims were paid in the first instance, as were 95 per cent of Income Protection claims, 87 per cent of Trauma claims and 84 per cent of TPD claims.
The total number of finalised claims fell to 66 per cent when compared to the total number of claims reported (see table below), a lower rate than the first round of 82 per cent, while the number of claims undetermined at the end of the data gathering period climbed from the first to second phase.
ASIC and APRA stated this was due to the second round of data gathering taking place over a shorter reporting period with a commensurately lower number of reported claims.
Table 1: Claims data gathered in Round 1 and Round 2 by ASIC and APRA
|Claims Outcomes||Round 1
(Jan ’16 to Dec ’16)
(Jan ’17 to Jun ’17)
|Claims finalised||103,100||82% of reported||47,069||66% of reported|
|– Claims admitted||95,000||92% of finalised||43,920||93% of finalised|
|– Claims declined||8,100||8% of finalised||3,149||7% of finalised|
|Claims withdrawn||6,400||5% of reported||4,604||6% of reported|
|Claims Undetermined at End of Period||16,800||13% of reported||19,497||27% of reported|
The new data also revealed that around 75 per cent of Death, Trauma and Income Protection claims were paid within two months and around 90 per cent of claims were paid within six months while only a third of TPD claims were paid within two months and two thirds within six months.
ASIC and APRA stated they would proceed to the third phase of the data gathering project and establish an ongoing reporting regime including the regular publication of comparable data at an aggregated industry and insurer-specific levels.
Commenting on the data APRA Member Geoff Summerhayes said, “APRA is fully committed to the development of this important new data reporting regime. The community expects the life insurance industry to be transparent and accountable for its conduct – it is said sunshine is the best disinfectant, and we are shining a light on the industry’s claims performance”.