An inquiry into overturned life insurance claims is to be launched by the Life Code Compliance Committee (LCCC).
Over the coming months it will look into decisions by insurers that are later overturned following a complaint, whether through internal reviews or by external bodies such as AFCA.
“Overturned claims can provide important insights for insurers,” states the committee in its just-released 2024-25 annual report.
“In some cases, they may point to poor decision-making, flawed assessments, inadequate training, or inconsistent processes.
The inquiry will examine how and why reversals occur…
“But they can also demonstrate that insurers have reconsidered the facts or evidence and taken steps to correct a decision, ensuring a fairer outcome for the customer.”
The committee states that customers, especially those experiencing vulnerability, overturned decisions can mean delayed or denied access to financial support when it is most needed.
“By analysing these cases, insurers have an opportunity to identify trends, strengthen their processes, and reduce complaints,” states the report.
“The inquiry will examine how and why reversals occur, how insurers monitor and respond to these outcomes and how insurers use this information to improve their systems, processes and decision frameworks”
The committee states identifying patterns, root causes, and better practices, will help strengthen decision-making processes across the industry.
The LCCC has also refined its compliance monitoring and enforcement activities to focus on issues that it states will have the greatest impact. It will focus on systemic issues and support insurers to improve their practice.
These include:
- Concentrating efforts on areas most likely to cause the greatest consumer detriment
- Promoting and encouraging insurers to self-report breaches of the Code
- Focusing on reducing future risk and consumer detriment while addressing significant historical breaches
- Tailoring our responses to the nature and seriousness of risks, considering consumer vulnerability and financial hardship
- Operating within the self-regulatory framework to complement existing regulatory requirements, focusing on positive customer outcomes while avoiding unnecessary duplication or inefficiency for insurers
