A life insurer has breached the Life Insurance Code of Practice by issuing unnecessary information requests and failing to meet timeframes when deciding on a customer’s TPD claim, says the Life Code Compliance Committee.
In issuing a Notice of Determination, the committee says its assessment and investigation confirmed that a life insurer had breached its obligations to:
- Request the information that it needs as early as possible and avoid duplicate information requests
- Tell the customer about its complaint process if it is unable to make a decision on the customer’s claim within 12 months when Unexpected Circumstances apply (section 8.17 of the 2016 Code)
The LCCC’s full determination explains that an insurer identified that it had failed to request necessary information as early as possible and that it had made a duplicate request for information.
“In deciding on a TPD claim, the insurer requested information on 14 April 2023 when it should have done so on 16 March 2023,” the determination states.
“As part of this claim assessment, the insurer requested a medical report on 26 September 2022 despite having received the report on 10 July 2022.”
The committee notes that as the insurer applied ‘Unexpected Circumstances’ to this claim, it had 12 months to reach a decision.
“When it could not meet this deadline, it also failed to give the customer details of its complaints process within the 12 months.”
The LCCC says that in response, the insurer took steps to reinforce the importance of timely and accurate information requests within the claims process.
“The insurer provided targeted feedback to the claims team which emphasised the need to request necessary information at the earliest opportunity and to ensure that any subsequent requests are carefully reviewed to avoid duplication.”
…Duplicate requests can create confusion and distress for customers, as well as extra work for third party stakeholders…
As to lessons learned, the committee says this underscores the importance of efficient claims handling and the need to avoid duplicate requests for information.
“Duplicate requests can create confusion and distress for customers, as well as extra work for third party stakeholders, such as medical practitioners, which can slow the claims process further.”
It adds that delays can exacerbate stress for customers “…who are already in vulnerable situations, especially when awaiting outcomes on TPD claims.”
Click here to review the full determination.
Reporting of the particular vexatious insurer in this matter by the Life Code Compliance Committee is totally USELESS and has absolutely NO VALUE to advisers and their clients unless the insurer is identified.
Otherwise this reporting is just tokenism. What we need is naming and shaming, otherwise it's just watercooler gossip
Do we need another Hayne commission where TAL was named and shamed?
Life risk specialists are fully aware that claims handling attitudes can really vary from one week to another, IN THE ONE INSURER, due to pressures elsewhere in the business.
ASIC require advisers to make "additional reasonable inquiries" in formulating their advice strategies and product solutions. Part of the product selection process MUST consider the current claims paying attitudes of insurers. And unless we've had that experience ourselves, we need an oversight body.
Step up LCCC and name and shame
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