• subs-bellGet the latest news! Subscribe to the ifa bulletin

TAL calls for insurance claim time limit

Life insurer TAL is calling for a time limit on insurance claims for “living benefit” policies as part of its initial Finanical System Inquiry submission.

TAL group chief executive Jim Minto said that claims for disability benefits can often be made years after the event, making it diffciult for the insurer to process the claim, ultimately increasing premiums for consumers.

“A big problem facing life insurers is that a claim can be made for a disability benefit many years after the customer has first stopped work and even ceased to have cover,” Mr Minto said.

“This means life insurers are forced to assess ‘total and permanent’ disability (TPD) claims for when someone was once covered and may even currently be working at the time of the late claim.”

Mr Minto said insurers are often using “patchy and inconclusive evidence” to determine the customer’s condition at the earlier date, which impacts the costing models of companies.


“That’s because these unaccounted for long-dated claims make it harder for insurers to adequately calculate their ‘incurred but not received’ reserves and capital needs,” he said.


Mr Minto added that this means consumers end up paying higher premiums because “insurers are legally required to set aside money for the ‘incurred but not received’ costs expected for such claims and therefore need to recover those extra costs”.

However, under section 54 of the Insurance Contracts Act, a claim cannot be denied on the basis of late notification.

Mr Minto nevertheless urged customers to maximise the chances of their claims being processed by lodging them as early as possible.