Insurer Compensates Claimants in Wake of Transition Issues

3

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Life Code Compliance Committee reported that the insurer failed to meet the necessary timelines for handling claims, resulting in 3580 breaches between November 2022 and August last year. This failure predominantly affected policyholders with income protection and total permanent disability coverage from a superannuation fund.

The issue arose following the insurer and the fund's decision to transfer claims processing responsibilities from a third-party service provider back to the insurer. The transition period saw numerous staffing issues at the third-party organization, which critically hampered its ability to meet the code's stipulated time frames for claims processing, the committee's investigation revealed.

The committee's findings indicated that the insurer violated several provisions of the claims handling process defined in the code. Specifically, the insurer failed to:

• Inform customers about the claims process within 10 business days;
• Provide updates on the progress of claims every 20 working days;
• Notify customers in advance when their income protection claim payments were nearing their end.

"Insurers must ensure their change management plans allocate adequate resources to meet service standards and prescribed time frames," the determination stated. "Utilizing effective risk mitigation strategies is crucial in countering potential issues, thereby protecting against disruptions and safeguarding customer interests during transitions."

Post-transition, the insurer took over claims management on July 1 of the previous year and initiated several steps to bolster compliance with the code. The company formed new teams and conducted training focusing on code requirements and system utilization.

"The insurer has augmented its oversight of claims processing by increasing case conferencing, setting up weekly performance tracking, and holding monthly governance meetings," the determination noted. "These improvements led to noticeable increases in compliance rates regarding time frame obligations, which became more stable starting in December."

These measures indicate significant shifts in how the insurer manages and processes claims, fostering better service standards and accountability.

Published:Wednesday, 4th Sep 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Surge in Mental Health Claims Reshapes Australia's Insurance Landscape

31 Oct 2025: Paige Estritori

Australia's insurance industry is experiencing a significant shift as mental health conditions have become the leading cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more

Australian Super's Claim Delays Raise Concerns Among Members

31 Oct 2025: Paige Estritori

Australian Super, one of the nation's largest superannuation funds, is facing criticism over significant delays in processing insurance claims, particularly those related to income protection and total and permanent disability (TPD). Members have reported prolonged waiting periods, leading to financial hardships and uncertainty. - read more

New Legislation Prohibits Life Insurers from Using Genetic Test Results

31 Oct 2025: Paige Estritori

The Australian government has enacted legislation prohibiting life insurers from using the results of genetic tests to refuse coverage or increase premiums. This landmark decision aims to eliminate genetic discrimination and encourage individuals to undergo potentially life-saving genetic testing without fear of financial repercussions. - read more

TAL's $4.7 Billion Payout Reflects Rising Insurance Claims in Australia

23 Oct 2025: Paige Estritori

Leading Australian life insurer TAL has reported a substantial $4.7 billion in life insurance claims paid over the 12 months ending March 31, 2025. This figure underscores the significant role life insurers play in providing financial support to Australians during challenging times. - read more

Encompass Protection Recognized as Best Income Protection Provider in 2025

23 Oct 2025: Paige Estritori

Encompass Protection has been honored with the Income Protection Insurance Award at the 2025 Money Magazine Life Insurance Awards. This accolade reflects the company's commitment to providing exceptional coverage and service to Australians seeking income protection solutions. - read more

Rising Mental Health Claims Reshape Australia's Insurance Landscape

07 Oct 2025: Paige Estritori

Australia's insurance sector is experiencing a significant shift as mental health conditions become the predominant cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more

Click for more Insurance News