ASIC released Report 498: Life insurance claims: An industry review yesterday, which found there were “significant shortcomings” in a number of areas of life insurance claims handling.
Although the report found that 90 per cent of claims are paid in the first instance, ASIC said there is a “clear need” for public reporting on life insurance claims outcomes – both at an industry and individual insurer level.
The Australian Prudential Regulation Authority (APRA) has also written to life insurers and superannuation trustees setting out its expectations for improvements to the oversight and handling of insurance claims.
“APRA and ASIC will work with insurers and other stakeholders over 2017 to establish a consistent public reporting regime for claims data and claims outcomes, including claims handling timeframes and dispute levels across all policy types,” said APRA.
“Group insurance arrangements in superannuation, including claims oversight and governance practices, remain an area of heightened focus for APRA and it is expected that the superannuation and life insurance industry will continue to work to improve practices in this area over time.”
In addition to mandatory public reporting, ASIC also laid out a number of other measures to improve standards in life insurance claims handling.
ASIC recommended to government the strengthening the legal framework covering claims handling; toughening up the consumer dispute resolution framework; targeted follow-up ASIC reviews on areas of concern; and strengthening industry standards and practices.
Concurrently, ASIC released an update on its investigation into CommInsure following the allegations of poor claims handling by Fairfax and ABC’s Four Corners in February.
ASIC said its enquiries are “ongoing” and confirmed it will be making no comment on potential outcomes at this time.
“Given the wide ranging and often complex nature of these matters, ASIC’s investigation is anticipated to continue for some time. The investigation remains a priority for ASIC and we will provide public updates where appropriate as the matter progresses,” said the regulator.
To date, ASIC has obtained approximately 60,000 documents for consideration; interviewed a range of individuals; obtained external legal advice; engaged “extensively” with CommInsure and CommInsure’s independent reviewers; and liaised with the Financial Ombudsman Service and the Superannuation Complaints Tribunal in relation to CommInsure matters.
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