REPORT 633: Holes in the safety net: A review of TPD insurance claims
© Australian Securities and Investments Commission October 2019 Page 18
What we expect of insurers and superannuation trustees
Frictions in
claims handling
leading to
withdrawn
claims
(see Section C)
We expect all insurers and superannuation trustees to work constructively
towards a consistent set of binding standards for life insurance that
covers both insurers and trustees and contains robust standards for all
third-party providers. The next iteration of the Life Code and the
Insurance in Superannuation Code should incorporate additional or
enhanced obligations including for proactive communication with
consumers during their claim, appropriate use of desktop surveillance,
and documented guidelines on training and competency requirements for
claims handling staff.
We expect insurers and, where relevant, trustees to take immediate steps
to implement our recommended changes to claims handling practices,
reinsurer arrangements and claims staff remuneration scorecards.
We expect insurers to have addressed our expectations by 31 March
2020.
ASIC will consider changes to claims handling practices made by insurers
and superannuation trustees in response to this review and monitor
consumer outcomes including withdrawn claim rates. If we remain
concerned about claims handling practices and withdrawn claims, we will
use our current and proposed powers, including under the Corporations Act
2001 (Corporations Act), to intervene.
We will ask certain insurers selected at our discretion to report to us on the
changes made to their claims handling practices, using our compulsory
notice powers under financial services laws if necessary. We will consider
reporting publicly on the appropriateness of the changes made by insurers
during 2020 and 2021.
We have previously highlighted publicly the need for trustees to improve
their processes around claims handling. This report provides more insight
into areas for improvement and we expect trustees to review their
processes with the benefit of this report by 31 March 2020. We will be
engaging with trustees to review what progress has been made.
Consumer harm
arising from
poor data
(see Section D)
We expect all insurers to:
invest in data resources and improve the quality of their data;
develop plans and timeframes for further developing their data
capabilities to capture, store and retrieve data and information that is
necessary to adequately manage conduct risk and consumer harm;
collect more data including on withdrawn claims, product value,
consumer satisfaction, claim assessment practices, and involvement of
third parties such as legal representatives;
collect data that enables analysis of each individual policy offered
(including where there are multiple covers in one policy), not merely
data aggregated at an insurer level; and
continue to work with APRA and ASIC on the industry-wide collection of
life insurance claims data.
ASIC will recommend to Government strengthening the regulatory
framework for data resources and the management of conduct risk. Our
ability to intervene on issues of data resources and conduct risk
management is limited by the exemptions in s912A(4) and 912A(5) of the
Corporations Act. We recommend that these exemptions be removed.
We will work with APRA, insurers and stakeholders to improve insurers’
data resources. This will include using the types of data fields identified in
Table 14 in this report as the basis for confirming the data capabilities that
insurers need to have in order to capture, store and retrieve data and
information that is necessary to adequately manage conduct risk and
consumer harm.
We will continue to work with APRA to improve the public reporting regime for
claims data and outcomes including considering expanding its existing scope
beyond claims into underwriting and other non-claims areas.