2017 continues to be the year where the spotlight is on the life insurance claims industry. Following the 2016 ASIC review and report into the failures of the life insurance claims sector, many retail and industry life insurance providers have embarked on an independent review process to make sure that their claims decisions are made fairly and reasonably. From the outset, this conduct ought to be applauded. After all, those immersed in this area are simply after a fair, fast and efficient life insurance claims process.
Westpac’s wealth management arm, BT Financial Group, has followed suit, recently conducting a review and publicly reporting that all decisions made were correct and that no claim has been incorrectly denied. Good news perhaps? However, the findings released by Westpac overlook the key issues in the industry.
The 2016 ASIC report highlighted that 47 per cent of all disputes between policyholders and insurers relate to complaints about evidence-gathering tactics and delay. Life insurance claims are often met in a time of need and a sense of extreme urgency. People are often at their lowest and need claims assessed fast and without delay. Unfortunately, my experience in this industry demonstrates that life insurers excel in customer service when it comes to selling life products, but devastatingly this service drops off significantly when the time comes to make a claim.
It is promising that Westpac has revealed that it has such robust decision-making processes when it comes to TPD claims. But I question whether this independent review also captures the struggles individuals face when they actually try to commence a claim or whether it includes people who eventually give up because they cannot get through to their insurance company or are simply unable to comply with their complicated and red tape-plagued claims processes.
I suspect it does not. It is becoming the norm in my legal practice for policyholders to seek legal representation simply because life insurers have made it hard for them to commence a claim. My clients are often stonewalled by insurers refusing to provide claim forms, answer the telephone or even provide confirmation of cover.
One of the largest international life insurers in Australia takes more than five business days to return a telephone call. This is particularly frustrating given that when you call this same life insurer to purchase a product, the call is immediately answered and issue addressed. In some cases, policyholders are being incorrectly told that they don’t have cover or aren’t eligible in circumstances where they clearly are. But the delay doesn’t stop there. Once a claim is lodged, in my experience, insurers are taking up to 120 days simply to allocate the file to commence the assessment process.
It troubles me to think how many hardworking Australians have simply given up as a result of poor customer service provided by their life insurer. I seriously doubt that Westpac’s congratulatory independent audit considered this type of client experience as being unfavourable.
If the life insurance industry is serious about responding to the ASIC report and findings, perhaps this ‘independent review’ ought to examine with greater scepticism whether claims are paid promptly and without delay and focus more on the customer experience.
William Barsby is a partner and practice manager of the superannuation insurance litigation department for Shine Lawyers
Six years and counting…I’ve lost everything since my accident and still have no clear answers with my tpd claim…..All things aside its just cruel to treat honest injured people in such a way…
Greater speed for life claims perhaps but a VAST improvement is needed in TPD/IP claims. Lawyers will gladly pursue this with all the vigor of any leech or parasite feasting on a carcass. Lawyers ought be sidelined as to be only there as a measure of last resort with legislation to force insurers via their advisers to deal with a claim in a more efficient and timely manner instead of the extraordinary level of time currently taken. Clients need certainty of outcome and not some glorified admin officer frustrating the claim for the sake of an insurers bottom line.
I agree Tony. Been handling claims for 15 years and never heard of a file taking 120 days to be allocated.
Recently One Path assessed and approved a TPD claim for a mutual client. As my decades of experience has taught me; the claims process is just that, a process. My client was patient and cooperative. It took just on eleven months to finalise but she was awarded a life changing amount of money. People tend to forget the particular insurance we are discussing pays a claim if a person is Totally and Permanently Disabled. People can have permanent disabilities such as a friend who suffers from Brittle Bone Disease but still be capable. His super funds did not accept he is Totally Disabled and they were right. He now manages his own business and is doing very nicely thank you.
William Barsby obviously only has experience in claims that have reached his desk as a solicitor not the thousands of claims that are handled promptly and efficiently each week. I would hope he would gain more experience by seeing the systems that are in place by life insurers to handle claims. In 40 odd years I have never heard of or experienced a case that has taken 120 days for a file to be allocated for processing.