New data reveals higher efficiency in insurance claims in 2023

Over 80% of claims were admitted for categories with the most claims

New data reveals higher efficiency in insurance claims in 2023

Insurance News

By Jonalyn Cueto

The Australian Prudential Regulation Authority (APRA) has released new statistics, presenting the insurance claims made in several categories including death, total and permanent disability (TPD), trauma, and disability income insurance (DII).

The data shows insurers received a total of 3,419 death claims with an average sum insured (SI) of $533,000. Of these, 85.9% were finalised, with 97.4% admitted (approved) and 2.6% declined. The average SI for admitted claims stood consistently at $509,000. Meanwhile, 12.1% of the claims remained undetermined at the time of reporting, highlighting an area where insurers might improve processing efficiency.

For TPD, insurers faced 2,995 claims with a higher average SI of $762,000, reflecting the severe impact of total and permanent disabilities on claimants. However, only 55.4% of these claims were finalised, and of these, 83% were admitted. This category saw a notably higher rate of declined claims at 17%.

The trauma category, covering claims from critical illnesses or events, had 4,979 claims with a smaller average SI of $264,000. The finalisation rate was high at 89.8%, with an admittance rate of 86.6%. The lower SI in this category may contribute to the higher percentage of finalised and admitted claims, as financial risk to insurers is relatively lower.

Disability income insurance, providing claimants income replacements, saw 1,522 claims with an average SI of $8,000 monthly. Finalisation stood at 83.6%, but a significant 12% of claims remained undetermined, suggesting potential delays in ongoing payments.

Consistency in time frame of resolution observed

Efficiency in claims processing emerges as another prominent theme, with death and trauma claims being resolved swiftly, with the majority settled within two weeks. However, TPD claims stand out for their longer processing times, with an estimated average duration of 4.7 months.

The data also sheds light on dispute-resolution dynamics within the industry. Trauma claims, in particular, exhibit a high dispute ratio in Group Ordinary, reaching 1,423 disputes per 100,000 lives insured. Additionally, TPD claims show a significant number of disputes in individual advised coverage, with 88 disputes per 100,000 lives insured. Despite these challenges, the majority of disputes across cover types are resolved, with the highest efficiency observed in Funeral claims disputes, where 99% are resolved within 45 days.

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