APRA, ASIC publish life claims and disputes data

APRA and ASIC have released the latest Life Insurance Claims and Disputes Statistics publication that presents key industry-level claims and dispute outcomes.

The publication featured outcomes for 20 Australian life insurers writing direct business over a rolling 12-month period from 1 January 2021 to 31 December 2021.

Findings showed admittance rates across all distribution channels had remained stable over time as had admittance rates by cover types.

Regarding the claims paid ratio, Group business increased considerably over time whereas ratios for Individual business stayed steady.

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Compared to Group products, Individual products tended to have lower claims paid ratios due to higher acquisition costs associated with the policy. This was reflected in the premium charged, the claims payments for these products were generally a lower percentage of the premium income.

Though APRA urged caution about the use of the claims paid ratio as a measure of consumer value or product profitability.

The report continued: "For insurers, claims payments are only one part of the costs associated with an insurance policy. Other costs, such as administration, acquisition costs and claims reserves, are not included."

"Whether and how profitable the product is to the insurer will also depend on these factors."

Claims paid ratios by cover type had significant variances between products.

The claims paid ratios for TPD and DII increased considerably over time, in contrast, the ratio for accidents fell significantly in 2019 before stabilising at a paltry 20%.

Moreover, despite the increase in claims paid ratios for TPD insurance, it had the longest average claims process duration; funeral insurance had the shortest time frame.

The report claimed the variances in claims processing durations reflected the difference in the respective complexity of insurance products.

Disputed outcomes which are resolved by ex-gratia payment, premium refund, partial payment, settlement, or non-cash benefit were most common among funeral cover types. The highest rate of claim reversal decisions was accident cover at 20%, albeit with a low number of total disputes resolved.