DII drives life insurance disputes: APRA

Disability income insurance (DII) continues to be a bugbear for the life insurance industry and is the most highly disputed product among advised, non-advised and group insurance customers, APRA statistics show.

In 2024, total DII disputes reached 1987 for advised customers, 366 for non-advised customers and a whopping 2896 for group super.

TAL received the largest number of disputes with 310 for advised customers, 246 for non-advised customers and 812 for group super, APRA's recently published life insurance and disputes tables show.

A total of 1711 of DII disputes were resolved during the period for advised customers, 316 for non-advised customers and 2572 were finalised for group super customers.

AIA Australia had the lion's share of resolved group super disputes at 996, finalising 91.1% of them in 0-45 days. AIA took 1.3 months on average to resolve these disputes, as did MetLife and ART Life.

TAL resolved a total of 691 group insurance disputes and took 1.3 months on average to do so, with 93.5% finalised in 0-45 days. TAL, however, took the longest on average to resolve 237 advised customer disputes at 2.5 months.

NobleOak also registered as one of the most sluggish to resolve a dispute at 2.1 months on average for advised customers, albeit from a small base of a total of six disputes.

In recent years, APRA put the microscope on DII, questioning its sustainability, profitability, pricing and actual benefits delivered to policyholders.

Otherwise known as income protection insurance, DII replaces policyholders' income in the event they are unable to work due to illness or injury.

APRA said DII made a turnaround in 2022 when it reported net profits after tax for five straight quarters. This followed an extended period of losses, with the sector losing $3.4 billion in the five years to 2019, resulting in APRA's intervention.

The latest statistics show that advised customers paid a total of $3.2 billion in annual DII premiums for 676,000 lives insured last year. TAL and Zurich Australia possess between 21-22% respectively of the advised market.

Some 4.3 million group super customers paid $1.8 billion in DII premiums. TAL holds 40.4% of this market, followed by ART Life with 20.3% and AIA Australia with 23.2%.

About 89,000 non-advised customers paid $154 million in DII premiums, with TAL holding 49.1% of this market.