ASIC names 7 life insurers over benefit miscalculations
The Australian Securities and Investments Commission (ASIC) has confirmed receiving breach reports from seven life insurers for the miscalculation of life insurance benefits.
In doing so, ASIC has called on life insurers to review the accuracy of their systems and controls for claims calculations and payments.
It said the seven insurers have implemented system fixes over the last three years and have commenced and in some cases completed remediation programs.
It said the following life insurers have undertaken remediation in the last three years due to claims calculation and payment issues:
- AIA Australia Limited
- Asteron Life & Superannuation Limited (now TAL)
- Resolution Life
- Swiss Re Life & Health Australia Ltd
- TAL Life Limited
- The Colonial Mutual Life Assurance Society Limited (now AIA)
- Westpac Life Insurance Services Limited (now TAL)
It said Resolution Life Australasia Limited (Resolution Life) (previously AMP Life Limited) has provisioned $50 million for its ongoing remediation program. The insurer is currently reconciling over 32,000 claims files to identify those that have been underpaid to customers.
ASIC Deputy Chair Karen Chester said, “Consumers need to have confidence that their insurers will calculate and pay their claims accurately. With seven life insurers now having self-reported this breach to us, we are calling on all remaining life insurers to ’review to ensure’ that this problem does not extend to them.
‘If it does, we expect life insurers to find and fix system problems and follow our remediation guidance to conduct a fair remediation and return money owed to customers in a timely way,’ added Ms Chester.
ASIC expects remaining life insurers to review the effectiveness of their systems and controls for claims calculations and payments, to ensure that all consumers receive the product benefits and features they are promised.
Insurers may be in breach of the obligation to handle claims efficiently, honestly and fairly if they do not accurately calculate and pay the benefits under a claim.
ASIC expects that life insurers will make the necessary investment in systems and controls to administer products and handle claims efficiently, honestly and fairly.
I’m not surprised by insurers underpaying IP claims. With newer IP policies having much narrower claims eligibility and benefits, insurers seem to be configuring their systems, and training their staff, in claims handling for these newer policies only. But many claimants will have older policies which entitle them to more.
I’ve had to intervene on behalf of clients, when claims assessors were going to short change them by not applying the older rules of the client’s actual policy. Unadvised clients are unlikely to realise they are being incorrectly assessed however.
What a surprise. What happens when insurers go direct, or the Fed Govt bans advisers from servicing insurance in Corporate Super Funds.
Sooner or later it will become obvious that advisers & life agents did a lot more service work than the Consumer Groups claimed they did.
What advisers have to chase up & sort out (behind the scenes) has to be paid for, one way or another.
Consumer groups are literal parasites.
I am interested in what insurance cost is passed onto the member and is it base cost or is it loaded.