{"id":26946,"date":"2014-07-29T14:14:37","date_gmt":"2014-07-29T04:14:37","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=26946"},"modified":"2025-09-02T11:34:37","modified_gmt":"2025-09-02T01:34:37","slug":"limit-claims-timeframes-increase-level-premium-take-up-tal","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2014\/07\/29\/limit-claims-timeframes-increase-level-premium-take-up-tal\/","title":{"rendered":"Limit Claims Timeframes, Increase Level Premium Take-up – TAL"},"content":{"rendered":"

TAL is calling for a time limit to be placed on \u2018living benefit\u2019 claims, and a greater recognition of level premiums, to help ease upward-trending insurance costs.<\/span><\/p>\n

<\/p>\n

\"Jim<\/a>
Jim Minto<\/figcaption><\/figure>\n

Responding to the Financial System Inquiry\u2019s (FSI) Interim Report<\/a>, TAL has expressed concerns about the ongoing affordability of life insurance, pressing for two key changes.<\/p>\n

First is a recommendation that insurers be able to place a time limit on TPD and income protection claims. While TAL has not specified an exact time-frame, it argues that many insurers are experiencing an increase in claims for events that occurred up to ten years earlier. In some instances, the claimant has long since ceased work, meaning the benefit is not being used in the way originally intended.<\/p>\n

According to TAL, \u2018late notified\u2019 claims, that is claims that are submitted many years after the claimable incident has occurred, have potentially harmful implications for life insurers\u2019 costing models.<\/p>\n

\u201cThat\u2019s because these unaccounted for long dated claims make it harder for insurers to adequately calculate their \u2018incurred but not received\u2019 reserves and capital needs,\u201d explained TAL Group CEO, Jim Minto<\/strong>.<\/p>\n

\u2018Late notified\u2019 claims are also difficult to resolve quickly<\/p><\/blockquote>\n

Mr Minto said this results in higher premiums for disability cover, because insurers are legally required to set aside money for the \u2018incurred but not received costs expected for such claims, and therefore need to recover those costs.<\/p>\n

\u2018Late notified\u2019 claims are also difficult to resolve quickly, because of a lack of evidence that can be used to determine what the customer\u2019s condition was at a much earlier date.<\/p>\n

TAL argues that, owing to a 2001 High Court decision which found that insurers cannot reject a claim submitted outside a specified timeframe, the problem of \u2018late notified\u2019 claims can now only be resolved by the Government amending the Insurance Contracts Act. The insurer has called on the FSI to consider legislative amendment of the Insurance Contracts Act so that a timeframe can be applied to \u2018living benefit\u2019 claims.<\/p>\n

The idea of restricting the period in which a policy holder can make a claim was first floated publicly by the Financial Services Council in April 2014, when it called for a seven year time limit on group disability claims (see: FSC to Lobby for Group Claims Time Limit<\/a>).<\/p>\n

The second recommendation made by TAL in its submission to the FSI is for greater recognition of the \u201caffordable\u201d level premium pricing method.<\/p>\n

\u201cConsumers are continuing to voice concerns about rising costs and pressures of manage their home budget. We have found that while most people choose stepped premiums for their life insurance which rise with age, they are overlooking level premiums which stay the same,\u201d Mr Minto said.<\/p>\n

\u201cAlthough level premiums initially start higher than stepped premiums, they can provide households price certainty for the future because families don\u2019t have to find extra funds each year.\u201d<\/p>\n

Consumers are continuing to voice concerns about rising costs and pressures of manage their home budget<\/p><\/blockquote>\n

TAL is calling for minor changes to the regulation of insurance premiums, to help life insurance companies make level premiums more attractive to customers.<\/p>\n

Specifically, TAL has recommended that \u2018\u2026the requirement for a minimum termination value on Long Term Risk business be optional for policyholders individually, on an \u2018opt out\u2019 basis, in order that the provision of level premium risk products be more affordable for a greater number of Australians.<\/p>\n

\u2018This would allow product designs to emerge for long term risk where customers have the right to choose an alternative product. Alternative designs may include the provision of a paid up value when a policyholder discontinues, still entitling them to receive an ongoing benefit albeit at a lower level.\u2019<\/p>\n

The submission also recommends that policies sold to people on benefits or fixed incomes such as a pension should preferably be level premiums only.<\/p>\n

Mr Minto said level premiums are comparable to fixing mortgage rates, which allow for better household budgeting and planning.<\/p>\n

\u201cAustralians are familiar with fixing their mortgage rates and locking in utility rates to manage costs, but are more reluctant to fix their life insurance premiums which, in the long run, usually end up cheaper overall.\u201d<\/p>\n

TAL has also recently signed the\u00a0Australasian Consensus Statement on the Health Benefits of Work. Click here<\/a> for more.<\/p>\n","protected":false},"excerpt":{"rendered":"

TAL is calling for a time limit to be placed on \u2018living benefit\u2019 claims, and a greater recognition of level premiums, to help ease upward-trending insurance costs.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8294,48,8,4],"tags":[],"class_list":{"0":"post-26946","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-claims","7":"category-company-news","8":"category-compliance-regulation","9":"category-products","10":"headers-new"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/26946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=26946"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/26946\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=26946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=26946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=26946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}