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Adviser-led TPD claim admittance rates fall

New data from APRA and ASIC shows 81% of adviser-led TPD claims were admitted in 2020, down from 87% two years ago.

The joint claims data published by APRA and ASIC included death, total and permanent disability (TPD), trauma, and disability income insurance (DII) among others.

It listed their admittance rates and claims paid out ratios for four channels (individual advised, individual non-advised, group super and group ordinary).

For the individual advised channel, admittance rates stood at: death (96%, same as 2018), TPD (81% vs. 87% in 2018), trauma (86% vs. 87% in 2018), and DII (94% vs. 95% in 2018).

Meanwhile claims paid ratio stood increased significantly in advised-individual channel: death (42% vs. 39% two years ago), TPD (56% vs. 45%), trauma (54% vs 62%), and DII (77% vs. 66%).

The claims paid ratio is the dollar amount of claims paid out in the reporting period as a percentage of the annual premiums receivable in the same period.

The admittance rates for advised individual claims continued to be higher than non-advised claims.

Superannuation life insurance claims

In the group super channel, admittance rates remained largely unchanged: death (98% in both years), TPD (89%, lower than 88% in 2018) and DII (95%, lower than 96% in 2018).

Claims paid out ratios for group super showed a sharp increase.

Death and TPD rose from 78% and 71% respectively two years ago to 82% and 97% respectively in 2020.

This means insurers selling TPD via group policies in superannuation funds paid out nearly as much in TPD claims in 2020 as the premiums they collected on TPD policies in the year.

In group super, the spike may be attributed to lower premiums collected in 2020 after legislation turned off insurance on lower-balance accounts from October, and the early release of superannuation, which whittled away at many superannuation accounts.

Read more: APRAASIC