Delays in income protection (IP) payments and rising dissatisfaction with TPD claims remain key pressure points for insurers, despite an overall improvement in compliance outcomes under the industry’s Code of Practice.
A new report from the Life Code Compliance Committee (LCCC) found breaches relating to the timely payment of ongoing IP benefits rose 67% in 2024-25.
The committee said breaches of clause 5.63 of the Life Insurance Code of Practice increased from 997 to 1,663 over the period, affecting 1,676 customers. The clause requires insurers to pay IP benefits by the due date or within five business days of receiving the information to make a decision.
Insurers attributed 95% of breaches to human error, process failures, and resourcing constraints, although the committee noted improved monitoring may have contributed to the higher breach count.
TPD Complaints
TPD complaints increased 21% to 3,089 in 2024-25 from 2,559 the previous year, driven by a rise in complaints about benefit adjustments, claims handling, and claims decisions.
Complaints regarding claim benefit adjustments doubled to 317, while complaints about claim process or handling rose 33% to 1,049. Complaints about claims decisions increased 11% to 841.
The committee said the rise reflected the inherent complexity of TPD claims, which often involve evolving medical evidence and vulnerable customers.
Improvements
The report also found insurers recorded 10,697 Code breaches in 2024-25, down 27% from 14,670 a year earlier. Customers affected by breaches fell 87% to 27,289 – the lowest level since the Code was introduced in 2016.
Eight of the 14 reporting insurers reduced their breach numbers during the year, while significant breaches fell to 16 from 32 previously.
The committee said reductions in high-impact breaches were encouraging but warned insurers remained overly reliant on staff performance rather than stronger systems and controls.
Independent Chair Jan McClelland said the organisation would continue its inquiry into claims handling practices, focusing on timeliness, fairness, and customer experience in complex claims including TPD, with findings expected in the first half of 2026.
