Average life insurance claims processing time almost doubled

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The average time taken for the Australian Financial Complaints Authority (AFCA) to close a life insurance complaint has increased by 59 days over the past two years.

The average time to close a complaint in fiscal 2019 was 69 days, while in 2020 it was 121 and in 2021 it had increased to 128.

In the last two fiscal years, 45% of complaints were closed between 61 and 180 days while in 2019, around 32% had their complaints closed between 61 and 180 days.

However, since the previous fiscal year, the overall number of life insurance claims received has decreased by 12%, from 1,778 to 1,623.

Life insurance claims represented 2% of the total claims received by APRA.

The top five life insurance complaints received by product were income protection (575), term life insurance (290), total and permanent disability (184), funeral plans (169) and trauma. (115).

AFCA closed 1,595 life insurance complaints last year, almost 7% less than the previous year. At the registration stage, 513 were closed while 473 were closed at the case management stage, 104 at the rule review stage, 225 at the preliminary assessment stage and 280 at the decision stage.

Speaking at the AFCA Members’ Forum, Emma Curtis, AFCA Chief Ombudsman – Insurance, said recording is the best place to close a case in terms of time, efficiency, cost and good results for the customer.

AFCA would monitor the resolution rate on record in the coming months, given the recent changes to RG 271.

“Complaints about the calculation of income protection benefits represented one-third of all life insurance complaints and they were closed within 60 days on average,” Curtis said.

“The most frequently reported issues were incorrect premiums, late claims denials and the quality of service in handling claims and misleading product or service information.

“Complaints about incorrect premiums were generally about the rate of increase in tiered premiums over time. These complaints are often exacerbated by the fact that companies do not clearly explain how stepped premium curves will affect future premium rates.

“We encourage companies to provide clear and effective premium rate tables or premium projections to customers at point of sale or annual notices to help reduce bill shock and the number of premium litigation. “

About a third of life insurance complaints (575 complaints) were about income protection policies.

In its annual review, AFCA said it “understands the challenges presented by plaintiffs’ corporate and trust structures, as well as the complexities of business accounting.”

This week, AFCA launched a digital platform to help financial firms better manage disputes that reach the mediation service.

The Member Benchmarking Dashboard was an interactive platform for financial companies that provided near real-time complaint data – updated daily – and gave individual companies more information about their complaints, including how quickly they were resolved.


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