According to data released by APRA and ASIC, life insurance companies accepted more than 90 per cent of the life insurance claims lodged in 2016. The data reveals that 95,000 (92.1 per cent) of the 103,100 claims that were finalised in 2016 were accepted by life insurers, and a further 8,100 (7.9 per cent) were declined.
The number of finalised claims represents 126,300 (81.6 per cent) of claims reported, of which 16,800 (13.3 per cent) were undetermined by the end of 2016 and 6,400 (5.1 per cent) were withdrawn.
The information was collected by APRA and ASIC as part of a joint research project to improve the reporting of insurance claims across the industry. Data from 16 insurers was provided regarding approximately 12,500 unique potential data points each, from areas of claims data and disputes data for term, TPD, policy statistics, trauma, and income protection products.
ASIC deputy chair, Peter Kell, said the initial analysis of the data reinforces the finding of ASIC’s Report 498 with over 90 per cent of life insurance claims paid by the insurer in the first instance. APRA noted in an information paper that the data in the initial report was not sufficiently reliable and not comparable to support entry-level publications, however was sufficiently robust to release at an aggregate industry level.
Insurers have struggled to report all requested data according to specific definitions, and different definitions were used to define a declined, withdrawn, or reported claim, which reduced data comparability. Due to the differences in the results, ASIC and APRA are seeking to formalise the standard definitions used by insurers during the second round of data collection.
APRA member Geoff Summerhayes said that they are focusing on insurers' ability to report according to common definitions, which includes how they can best manage system constraints. Significant progress has been made to fully embed definitions across the industry, however we are far from resolution on this.