ASIC says progress has been made on a 2019 review of TPD insurance claims but “more needs to be done”.
The corporate regulator identified consumer harms and “holes in the safety net” in a report two years ago and on Monday, provided an update on how nine life insurers have addressed those concerns.
ASIC confirmed that all insurers have started reviewing restrictive TPD definitions, are working with trustees for insurance in superannuation, and have improved some claims handling practices.
“ASIC’s extensive TPD review in 2019 revealed that TPD product design and claims handling resulted in poor consumer outcomes,” ASIC deputy chair Karen Chester said.
“While all nine insurers are working to repair the TPD safety net in response to our 2019 findings, our follow up work reveals more needs to be done. Important areas for improvement remain, such as better ways to store and use data. We found that data captured by insurers is often inconsistent or not in a searchable or reportable format, limiting its usefulness.”
Ms Chester said insurers need to lift their data capabilities and invest more in their data systems to improve claims handling problems.
“While today’s report focuses on steps insurers have taken in response to ASIC’s earlier work, superannuation trustees must also engage with TPD design issues and work on lifting standards, for the benefit of their members,” she said.
“While some trustees have taken positive steps in this direction, others have more work to do.
“Of the 9 million Australians that have TPD cover most hold it through their superannuation fund. Trustees are clearly in the ‘driver’s seat’ in delivering good outcomes for their members through well designed TPD cover.
“Insurers and trustees must also act now to deliver on the improvements needed to meet the 5 October 2021 design and distribution obligations.
“In doing so, they also need to be mindful of their new obligations to act efficiently, honestly and fairly (under s912A) when handling claims and providing superannuation trustee services.”
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