Life insurer cops formal warning over claims handling failures

Yasmine Raso

Senior Journalist

23 June 2026

The Life Insurance Code Compliance Committee (Life CCC) has hit a life insurer with a formal warning and audit requirement over claims handling failures that resulted in hundreds of the Life Insurance Code of Practice.

The committee said the unnamed life insurer failed to request information at the “earliest available opportunities” from customers who had submitted claims as required by the code, resulting in delays of more than eight months for some claimants and approximately 358 breaches recorded between July 2023 and May 2025.

The committee found the failures – which were self-reported by the insurer in July 2024 – were due to a mix of “staffing shortfalls, capability gaps, outdated claims practices and insufficient monitoring and oversight”. The insurer later paid a combined $160,000 in interest to 101 affected customers.

“People make life insurance claims at some of the hardest moments in their lives,” Chair of the Life CCC, Jan McClelland AM, said.

“When an insurer does not ask for the information it needs as early as possible, claims can stall and customers can be left facing unnecessary stress, uncertainty and financial pressure.

“Good claims handling depends on effective controls working as intended. It is important that insurers maintain strong oversight and respond promptly when they see issues emerge.”

As part of the sanction issued by the committee, the life insurer was formally warned and directed to undertake an independent audit of its overall compliance with the Life Insurance Code of Practice. The audit is expected to analyse the insurer’s procedure for requesting information from claimants, how effective its remedial measures are and its oversight and monitoring framework.

“When problems emerge, insurers need to act quickly to understand what has gone wrong, fix it, and prevent it from happening again,” McClelland said.

“Life insurers must have the systems, governance and capability to meet their Code commitments in practice. Customers are entitled to have their claims handled fairly, clearly and without avoidable delay.”