In a statement, BT Financial Group chief executive Brad Cooper said the findings in ASIC’s industry-wide life insurance report should be “treated with caution”.
He said the 37 per cent TPD claims denial rate that ASIC found in BT’s life insurance business is not exact.
“In BTFG’s case, for example, the data includes some claims which were lodged by people who were not insured with us at the time of their injury or illness, and some claims by customers who were paid under other parts of their policy, such as income protection,” Mr Cooper said.
“If we took these things into consideration the number would be much lower. The facts are that BTFG declined 58 TPD claims in 2015. During the same period BTFG paid $255 million in life insurance claims to 2640 beneficiaries.”
The statement added that TPD insurance claims are only paid when a person is unable to work again for the rest of his or her life, and BT aims to help clients recover and resume employment.
Mr Cooper, however, agreed that the industry needs to improve the consistency of data so that consumers can make valid comparisons of products.
“Each insurer will have used their own definition of what constitutes a denied claim as part of ASIC’s review,” he said.
“We strongly support the need for standardised reporting to allow consumers to make meaningful comparisons.
“However, we are committed to ensuring that all our products meet the highest standards and we will have a further look at each of the 58 declined claims to ensure that our processes are robust and fair.”
Wow the data from thousands of claims was “flawed” yet the data from a small number of advisers to say that all advisers were churning was not?? Even when lapse rates from advised risk have remained constant and good.
Unbelievable hypocrisy from another FSC member.
Should the answer now be to reduce the salaries of all company execs and employees dealing with claims by 50%???
I wonder if ASIC can give me some guidance as to how I satisfy “the best interests duty” to my client – if I recommend a TPD policy with an insurance firm that has a decline rate of ~ 37%. Whilst the same firm – may or may not also be one of the two who also calculate at least part of the salary / bonus of employees, based on their “decline rate”.
BTFG sells very little group insurance actually so no it’s likely that they record every enquiry to the claims team and track it to an outcome. This is the one insurer in the market who has published the third party review conducted by the CMAP (The Risk Store) program. Unlike a few other companies I would personally back BT 100% with respect to their claims process.
“In BTFG’s case, for example, the data includes some claims which were lodged by people who were not insured with us at the time of their injury or illness”
Is it reasonable to assume that the issue with the quote above is that the claimants obtained insurance that was not underwritten upfront and simply assumed it would cover pre-existing conditions. Underwriting took place at the time of claim and they were knocked back for something they would have been made aware wasn’t covered if they held a retail policy?
Why compare the TPD claims denied with the LIFE INSURANCE claims paid? Because it sounds so much better to compare 58 denied claims with “2640 beneficiaries” than it does to say that 58 claims out of 158 were denied!!
I get the arguments about group life not being underwritten, BT “inheriting” issues, etc, etc but they do themselves no favours when they try to cover up things by quoting completely misleading figures.
I agree, John. My point being is that the LIF framework is designed to push consumers towards these very policies that are not paying out. It’s just not the outcome we need to reduce the underinsurance problem throughout the nation… Lets planner remuneration out of the debate and just work out what is going to get people to take up adequate protection with acceptable claim rates.
Reality, is it more likely that the claimants have had an injury, have not advised that on their personal statement and it wasnt identified because a PMAR or further evidence was not required at time of underwriting? Has the insured then tried to lodge a claim that has subsequently been declined after medical evidence was requested from GP/specialist/HIC? Would you expect the insurer to pay out in these circumstances? I wouldnt.