Professional Opinions director Doron Samuell said in a blog recently that a consumer report card that highlights claim denial rates of life insurers is “ill-conceived” and “a pointless and potentially dangerous exercise”.
ASIC and APRA launched the pilot phase of a project in early May to collect and publish life insurance claims data on a per insurer basis, and include data on claims handling time frames and dispute levels.
Dr Samuell said this would change the drivers of insurance decisions from accuracy to popularity, and invite “disastrous outcomes”.
“While it is perfectly appropriate for regulators to monitor the life industry, they make no mention of the potential consequences of their costly meddling,” Dr Samuell said.
“Executives in every insurance company will be devising strategies to focus on performing well in those tables. The most obvious way to achieve those outcomes is to pay more claims.”
Dr Samuell noted that insurers will understand that the lowest decline and complaint rates will be most popular with consumers.
He said the only parties who could complain about such an outcome are shareholders, and their views won’t make it onto the table.
“Insurers would be wise to replace their claims departments with an enlarged accounts payable service,” Dr Samuell said.
“Disability insurance premiums continue to rise. With ASIC’s new initiatives, it is foreseeable that it will be a giant nudge towards market unsustainability.”
ASIC released the findings of its industry-wide life insurance review last year, saying it found “a clear need for public reporting on life insurance claims outcomes at an industry and individual insurer level”.
So its NaPlan for insurers. All the insurer’s staff trained to pass the test, like our kids..
When will our regulators understand that at the end of the day claims managers are human ( well almost all ) and the judgment they make should be objective, based on the policy AND the evidence. But the marginal decisions will often be subjective: that’s human nature
Advisers know claims managers for RETAIL CLAIMS will often listen to reasoned, well presented arguments from risk ADVISERS who know the contracts backwards. And we always work to the Teddy Roosevelt motto of “talk softly, and carry a big stick ”
If populist pressure on our regulators results in insurers feeling pressured to pay claims that are undeserving, then either insurers will go broke ,or premiums will go up, but less people will be able to afford being insured, and ScoMos debt and deficit will be even more out of control.
Good advisers filter claims with no prospect of success. The published stats on successful and failed trauma claims show a percentage of claimants refused because the trauma benefit was not actually listed in the policy.
Does the populist media and it’s camp followers want those claims paid ? Its not a perfect claims system, but RISK ADVISERS will keep the bastards honest