APRA releases latest life insurance claims and disputes statistics

APRA releases latest life insurance claims and disputes statistics | Insurance Business

APRA releases latest life insurance claims and disputes statistics

The Australian Prudential Regulation Authority (APRA) has released the latest Life Insurance Claims and Disputes Statistics covering January 01, 2020 to December 31, 2020.

The report is the product of a joint project between APRA and the Australian Securities and Investments Commission (ASIC) to make it easier to compare life insurers' performance in handling their claims and disputes. The latest data is the fifth publication using the full data set since it was launched in March 2019.

APRA's Life Insurance Claims and Disputes Statistics showed the key industry and entity-level claims and dispute outcomes for 20 Australian life insurers writing direct business excluding reinsurance.

Meanwhile, ASIC updated its MoneySmart life insurance claims comparison tool with the latest data. The online tool compares insurers across cover types and distribution channels on four metrics – the percentage of claims accepted, the length of time taken to pay claims, the number of disputes, and the policy cancellation rates.

The report revealed a 93% admittance rate across all cover types and distribution channels in the reporting period. Generally, individual advised businesses recorded higher admittance rates than individual non-advised businesses for the same cover type.

Specifically, individual advised businesses recorded the following:

  • death: 96% for individual advised businesses versus 90% for individual non-advised businesses;
  • TPD: 81% for individual advised versus 67% for individual non-advised;
  • trauma: 86% for individual advised versus 86% for individual non-advised;
  • DII: 94% for individual advised versus 85% for individual non-advised;
  • CCI: n/a for individual advised versus 86% for individual non-advised;
  • funeral: n/a for individual advised versus 99% for individual non-advised; and
  • accident: 75% for individual advised versus 86% for individual non-advised.

APRA noted that the higher admittance rates at individual advised businesses than individual non-advised could be driven by policyholders having clearer expectations upfront of what is covered by the product or the adviser discouraging the policyholders from lodging a claim not covered by their policy.

The regulator clarified that the individual advised accident, which has an unusually low remittance rate, is the exception. However, the number of observations was quite small (12 finalised claims for individual advised versus 2,938 for individual non-advised).