ASIC gagged from naming claim denying insurers

ASIC gagged from naming claim denying insurers

ASIC gagged from naming claim denying insurers The Australian Securities and Exchange Commission (ASIC) has admitted to a parliamentary committee that it has been gagged by big insurers from releasing the names of life insurers that deny claims.

The revelation came during the regulator’s appearance before the parliamentary Standing Committee Economics on Friday.

Michael Saadat, ASIC’s senior executive for insurers, said that insurers have yet to consent to revealing the controversial information.

"They can consent to us publicly revealing the information but they haven't done so. The insurers we have spoken to so far have expressed significant concern," Saadat said, according to The Sydney Morning Herald.

The at times fiery meeting saw committee members seek to reveal the two insurers that reportedly pay claims staff an incentive for denying claims and to find the three insurers that decline between 24% and 37% of total and permanent disability claims.

"I put it to you that you're not following your obligations.... [Not releasing the names] doesn't help a consumer who may be in the market right now," Labor MP Matt Thistlethwaite said, according to The Sydney Morning Herald.

“They have asked us to keep that information confidential,” ASIC deputy chair, Peter Kell, added.

Following the meeting, it was revealed that Westpac’s life insurance arm had rejected 37% of permanent disability claims, according to The Weekend Australian.

The committee appearance comes during a turbulent time for the life side of the industry. ASIC released their long awaited report on claims handling practices in the life insurance industry with the regulator set to join forces with APRA to collect and publish rates of declined, approved or withdrawn claims, timeframes for claims decisions and details of insurance-related disputes.

“This data will be available to consumers for the first time at the individual product and distribution channel levels, providing a means for consumers to assess the claims performance of the life insurance sector,” Minister for Revenue and Financial Services Kelly O’Dwyer said.   

“While the findings of the ASIC review are welcome, there are clearly areas where the industry must do more to improve consumer outcomes and help restore public trust in the life insurance sector.”

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2 Comments
  • MichaelD 17/10/2016 1:34:30 PM
    Not being familiar with life insurance, I envision that permanent disability is an area perhaps subject to higher levels of fraud compared to general insurance, much like is seen with work-cover. I would be interested to see whether these denials are due to 'fine print', issues with the evidence being provided to the insurer, or just flat out fraud.
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  • Martin 17/10/2016 3:27:37 PM
    Whilst our Brokerage does not get involved with Life/Disability risks directly there are three aspects to this enquiry and adverse publicity which reflects on the whole Insurance Industry which is unfortunate.

    1. Any proof of "bonuses" paid by any Insurer to get out of paying claims is offensive to the principles of all Insurance contracts both Life and General products and any such organisation having such a practice should be named and shamed and such management be dismissed for the good of the whole Insurance Industry.

    2. "You can lead a horse to water----" but you cannot force consumers to actually read or be forced to read understand Policy Wordings ( PDS). I consider it totally unreasonable for any Agent/Broker/Insurer to sit and read thru and explain a whole document to every possible Insured event. That would also open a "can of worms"- "Oh! I don't think that was clearly explained to me" comments will be a daily occurrence.

    3. The "front up" commission structure surrounding what can be quite expensive products- especially Disability Insurance should perhaps be reviewed as this can easily lead to sell a totally unsuitable product simply because of the commission's to be made and not having available suitable alternatives.

    The more consumer laws potentially introduced will only add to consumer costs and with "on-line" access utilised by many younger consumers in the modern era will create only more consumer complaints to Insurers and regulation authorities.

    Think long term customers not short term would be a much better approach.

    Leave Insurance to professionals in the Industry to advise and assist and not some counter staff or Agents very basically trained to sign up their say, Banking/Association ,customers to contracts that simply do not meet their needs and expectations.


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