{"id":43048,"date":"2018-11-15T08:00:53","date_gmt":"2018-11-14T22:00:53","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=43048"},"modified":"2019-03-26T07:45:30","modified_gmt":"2019-03-25T21:45:30","slug":"community-standards-will-reshape-cost-of-claims","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2018\/11\/15\/community-standards-will-reshape-cost-of-claims\/","title":{"rendered":"‘Community Standards’ Will Reshape Cost of Claims"},"content":{"rendered":"

The emergence of \u2018community standards and expectations\u2019 as a new benchmark for the behaviour of institutions will lead to a number of changes to the life insurance industry that is likely to have a multi-million dollar impact on policyholders, according to a report from reinsurance consultancy, Retender<\/a>.<\/p>\n

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Retender Managing Director, Ilan Leas<\/figcaption><\/figure>\n

The report \u2013 titled The Cost of Consumer Expectations<\/em> written by Retender Managing Director, Ilan Leas<\/strong>, states that while\u00a0community standards and expectations is not a\u00a0legislated term, nor one that is clearly defined, life insurers will be expected to align their business with what consumers expect and not just the letter of the law.<\/p>\n

This alignment will result in a number of trends, including greater transparency from life insurers as well as more pressure on them to pay ‘grey’ claims that will put more pressure on the price of life insurance premiums.<\/p>\n

\u201cThe last few years, culminating in the Royal Commission, has brought to the fore the concept of community standards and expectations. It is clear that insurers will need to make far reaching changes to their business models to cater for this shift,\u201d Leas said.<\/p>\n

He added that insurers will shift from sticking with the letter of the law and begin\u00a0asking the question of \u2018Should we do it?\u2019 when making determinations about claims which would have a financial impact.<\/p>\n

“…these four words – community standards and expectations –\u00a0 will be a game changer in terms of how claims are going to be assessed…”<\/h6>\n

\u201cIn terms of the impact on price, at its simplest, more claims will be paid which is great for consumers but this naturally comes at a cost for the insurance pool,” he said<\/p>\n

The report estimates the price impact may be around two to five percent for one-off costs, depending on the product line and distribution channel, and a trend cost between two to three percent per annum.<\/p>\n

\u201cIt\u2019s easy to overlook that the life insurance industry currently pays out more than 90 percent of claims but these four words – community standards and expectations –\u00a0 will be a game changer in terms of how claims are going to be assessed in the system,” Leas said.<\/p>\n

These changes will deliver improved customer outcomes, according to Leas, however life insurance, consumer groups and other decision-makers would need to understand the unintended consequences of this coming shift.<\/p>\n

\u201cThe community expects our industry to ensure that premiums are sustainable and so we cannot take an \u2018ostrich head in the sand\u2019 approach to understanding and catering for future trends. This challenge also highlights the importance of robust benchmarking of pricing to cater for policyholder and member best interests,” he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The emergence of \u2018community standards and expectations\u2019 as a new benchmark for the behaviour of institutions will lead to a number of changes to the life insurance industry that is likely to have a multi-million dollar impact on policyholders, according to a report from reinsurance consultancy, Retender.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,4,5],"tags":[],"class_list":["post-43048","post","type-post","status-publish","format-standard","category-compliance-regulation","category-products","category-services"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/43048","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\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=43048"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/43048\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=43048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=43048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=43048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}