After ASIC reviewed the life insurance industry in search of problematic claims processes, it found that an area of concern is direct life insurance products. The claim denial rates were higher than expected, compared with policies sold via advisers and group insurance polices, prompting a new review.
There remains a law in place that exempts insurance claims from the law of the Corporations Act, however ASIC is seeking to get this overturned so penalties for misconduct can be appropriately punished.
The claims denial rate for direct policies was at 12 per cent, whereas retail insurance policies sat at 7 per cent, and group life was 8 per cent. Most disputes were also regarding the claims process.