A life insurer failing in its claim handling obligations thousands of times drew significant reader interest this week…

A life insurer breached the Life Insurance Code of Practice, by failing in its claim handling obligations 3,580 times over a 10-month period, the Life Code Compliance Committee has found.

In its latest Notice of Determination the LCCC says it found the life insurer failed to:

  • Tell customers about the claim process within 10 business days of it being notified of the claim
  • Tell customers about the progress of their claims at least every 20 business days and to respond to requests within 10 business days
  • Tell customers about the claims decision within 10 business days (2023 Code) or 15 business days (2016 Code) of receiving all necessary information
  • Make a decision on customers’ claims within two months for income protection claims and six months for lump sum claims
  • Tell customers in advance that their income protection claim payments were coming to an end

The committee says the life insurer reported 3,580 breaches of the claim-handling obligations between 1 November 2022 and 31 August 2023.

It says the insurer attributed the breaches “…to resourcing issues while transitioning certain claims-handling operations from a third-party service provider between November 2022 and July 2023.”

…during the transition period the third party lost a significant number of staff which strained its resources…

The LCCC’s full determination notes that during the transition period “…the third party lost a significant number of staff which strained its resources and compromised its capacity to handle claims within the Code’s required timeframes. This resulted in multiple instances of failing to meet claims timeframe obligations.”

To remediate and rectify the breach, the life insurer:

  • Set up new teams for claims-handling, provided training on Code obligations, and established key performance indicators for staff
  • Committed to financially compensating 942 claimants by 31 October 2024

The committee says this case “…highlights the importance of comprehensive change management plans that support staff and ensure the insurer can meet obligations for service standards and timeframes.”

Click here to view the committee’s full determination.

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1 COMMENT

  1. 3580 claims breaches in 10 months. Magnificent!

    But which insurer perpetrated this nonsense.

    This report is totally useless to advisers and their clients if the insurer hasn't been named, so that advisers, in undertaking ASICs requirement of undertaking To make "additional reasonable inquiries", can fully advise their clients on the suitability of that insurer, regardless of whether or not it's cheap

    Unlike wordings of contracts, this is one of those little issues that can be remedied quite easily, merely by devoting resources to fix the problem.But the discovery also speaks to arrogance of CEOs thinking they get away with something "for just a little bit longer". Like still supporting LIF!

    But because the LCCC has chosen not to name the insurer, many advisers are now going to start asking questions as to the identity of this particular offender

    Transparency, anyone?

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