2 September 2022 - ASIC review finds room for improvement remains with life insurance claims handling

ASIC’s review of nearly 4800 individual disability income insurance (IDII) claims received between 1 January and 30 June 2021 has found more work is needed by insurers to ensure that consumers are protected from unfair practices in non-disclosure investigations and physical surveillances.

‘ASIC’s latest review sought to test whether insurers were now entrenching good practices, especially with insurers now being subject to new claims handling obligations. We also sought to identify any outliers and areas for improvement. Following the review, we remain concerned that some insurers still appear to be ‘fishing’ for non-disclosures to avoid paying out legitimate claims. We are putting insurers on notice that we will take action where we see consumer harm from poor claims handling practices,’ added Ms Chester.

‘We also identified concerns around mental health claims and investigations. Non-disclosure investigations and physical surveillance are intrusive measures and insurers must ensure they have reasonable grounds to undertake them. We expect physical surveillances to be used as a last resort only,’ concluded Ms Chester.