The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have published new data on life insurance claims and claims related disputes for the period 1 January 2017 to 30 June 2017.
The new data released today continues to indicate that more than 90 per cent of claims that go to decision are paid in the first instance. The data also shows that different products and distribution channels have different claims and dispute outcomes, with 97 per cent of death claims being paid in the first instance, 84 per cent for total and permanent disability claims and 87 per cent for trauma claims. A summary of the results is provided in Tables 1-3 below.
These results are consistent with previous data released in November 2017 and with the results in ASIC’s Report 498 Life insurance claims: An industry review in 2016.
Today’s release completes round two of the pilot phase and will be followed by a third and final round of data collection.
The two agencies are now moving to establish an ongoing reporting regime (using APRA’s data collection powers) with regular publication of credible, reliable and comparable data at both aggregated industry and insurer-specific levels. The aim is to improve transparency of life insurance claims practices as well as the quality of information underpinning public debate and policy-making. Consequently, this should help to drive accountability in the sector.
In addition to the data being released today, the agencies are responding to submissions on the May 2017 Discussion Paper Towards a transparent public reporting regime for life insurance claims information, and seek input by 5 July 2018 on our proposed approach to industry and insurer-level publications.
APRA Member Geoff Summerhayes said: ‘APRA is fully committed to the development of this important new data reporting regime. The community expects the life insurance industry to be transparent and accountable for its conduct – it is said sunshine is the best disinfectant, and we are shining a light on the industry’s claims performance.’
ASIC Deputy Chair Peter Kell said, ‘ASIC found that the comparability and reliability of data in the life insurance industry was poor. Working together, ASIC and APRA have made significant progress with industry to improve the data. Our data reporting regime is already bringing improved transparency to this area, and our continuing work is benefiting consumers, insurers, and regulators.’
Through the Financial Services Council (FSC), the industry has proposed to engage and fund an independent data expert to collect and analyse claims and disputes data. The expert would assist insurers to provide the necessary data to the agencies, and bolster the industry’s data capabilities and ability to understand and communicate its own performance. The agencies support this approach in principle, and are continuing to engage with the FSC on this proposal to ensure the objectives of the new data regime are met.
Data tables
Copies of the response paper released today, including the consultation items and additional round two data, are available here.
Data tables
Table 1: Second pilot round summary and comparison with first pilot round
|
Claims Outcomes |
Pilot round 1 |
Pilot round 2 |
||
|
Number |
Ratio |
Number |
Ratio |
|
|
Claims reported |
126,300 |
71,170 |
||
|
Claims finalised |
103,100 |
47,069 |
||
|
- Claims admitted |
95,000 |
92% of finalised |
43,920 |
93% of finalised |
|
- Claims declined |
8,100 |
8% of finalised |
3,149 |
7% of finalised |
|
Claims withdrawn |
6,400 |
4,604 |
||
Table 2: Claims admittance rate by cover type and distribution channel – second pilot round (1 January 2017 to 30 June 2017)
|
Cover / Product Type |
All |
Individual advised |
Individual non-advised |
Group |
|
Death |
97% |
98% |
88% |
98% |
|
TPD |
84% |
86% |
67% |
84% |
|
Trauma |
87% |
87% |
84% |
* |
|
DII |
95% |
95% |
83% |
96% |
|
CCI death |
92% |
92% |
* |
|
|
Funeral |
99% |
99% |
* Small volumes of claims reported, but masked for reasons of confidentiality.
Table 3: Claims processing duration by cover type - second pilot round (1 January 2017 to 30 June 2017)
|
Duration Category |
Death |
TPD |
Trauma |
DII |
CCI Death |
Funeral |
|
0-2 weeks |
52% |
15% |
33% |
33% |
62% |
76% |
|
> 2 weeks to 2 months |
22% |
18% |
42% |
41% |
15% |
20% |
|
> 2 months to 6 months |
17% |
31% |
21% |
19% |
13% |
3% |
|
> 6 months to 12 months |
5% |
20% |
3% |
4% |
4% |
0% |
|
> 12 months |
4% |
15% |
2% |
3% |
6% |
0% |
Background
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6.1 trillion in assets for Australian depositors, policyholders and superannuation fund members.
The Australian Securities and Investments Commission (ASIC) is Australia’s corporate markets and financial services regulator. ASIC contributes to Australia’s economic reputation and wellbeing by ensuring that Australia’s financial markets are fair and transparent, supported by confident and informed investors and consumers.