Advised sales get more claims paid

The Australian Securities and Investment Commission (ASIC) decided they would conduct their own investigation and see what was happening. In spite of some efforts to make it sound terrible, the level of claims payment is good if a comparison is possible, with, say the UK. What’s more, sales made by advisers tended to have more claims paid than those made direct.

• Overall 90% of claims are paid
• Claim decline rates were: 4% for life, 7% for income protection, 14% for trauma, and 16% for TPD

I hope that our regulators contemplate a similar investigation. But the industry, of course, does not have to wait to be told. In the UK the Association of British Insurers developed common claims reporting standards and encouraged members to release data as a way of boosting confidence in the insurance market. We should do the same. I am willing to bet that showing consumers that we pay claims is a more effective way of growing the market than always nagging potential customers about underinsurance.
There are many causes for disputes about claims, but ASIC’s work lists the main ones. The single largest wasn’t non-disclosure, it was requests for evidence. Perhaps, when ASIC gets around to taking a more detailed look, that will amount to the same thing. The second-most common cause for complaint was delay. Between them these issues accounted for nearly half of all claims problems. Some of them will be fixable. Having ASIC interested probably makes them more fixable. So this is a good review on the part of the regulator.

If you are an adviser, you will like this part of the media release:
“ASIC's review also found that there were higher claims denial rates in relation to insurance policies sold direct to consumers with no financial advice (compared to policies sold through advisers and group insurance policies).”