Life insurers still falling short on claims handling says ASIC

Mike Taylor

Managing Editor and Publisher

2 September 2022

The Australian Securities and Investments Commission (ASIC) has again marked life insurers down on life insurance claims handling.

An ASIC review of nearly 4800 individual disability income insurance (IDII)claims between 1 January and 30 June, 2021, has found more work needs to be done by insurers to ensure consumers are protected from unfair practices in non-disclosure investigations and physical surveillances.

What is more ASIC has said that it is continuing to inquiry into life insurers which have a higher proportion of potentially unwarranted investigations.

ASIC deputy chair, Karen Chest, even cited the fact that following the review, “we remain concerned that some insurers still appear to be ‘fishing’ for non-disclosures to avoid paying out legitimate claims”.

“We are putting insurers on notice that we will take action where we see consumer harm from poor claims handling practices,” she said.

“We also identified concerns around mental health claims and investigations. Non-disclosure investigations and physical surveillance are intrusive measures and insurers must ensure they have reasonable grounds to undertake them. We expect physical surveillances to be used as a last resort only,” Chester said.,

ASIC has written to the life insurers covered by the review to outline areas for improvement and communicate expectations for their use of investigative tools, including the obligation to handle claims efficiently, honestly and fairly.

These life insurers covered by the review were:

AIA Australia Limited (AIAA), comprising AIAA and The Colonial Mutual Life Assurance Society Limited (CMLA);

TAL Life Limited (TAL), comprising TAL and Asteron Life & Superannuation Limited (Asteron);

Zurich Australia Limited (Zurich), comprising Zurich and OnePath Life Limited (OnePath);

MLC Limited;

Resolution Life Australasia Limited (formerly AMP Life Limited); and

Westpac Life Insurance Services Limited (Westpac) (now TAL Life Insurance Services Limited as of 1 August 2022).