Insurer Compensates Claimants in Wake of Transition Issues
Insurer Compensates Claimants in Wake of Transition Issues
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.
On September 2, 2024, an insurer has been mandated to compensate over 900 policyholders due to its failure to adhere to claims processing time frames outlined in the Life Insurance Code of Practice.
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.
Australian private health insurance premiums are set to rise by an average of 4.41% from 1 April 2026, marking the most significant increase since 2017. Health Minister Mark Butler stated that this adjustment reflects the escalating costs of medical and hospital services, which have risen by 5% over the past financial year. This increase is expected to impact over 15 million Australians who hold private health insurance policies. - read more
In response to escalating operational costs faced by private hospitals, health insurers have increased their payments to these facilities. Recent data indicates that payments to private hospitals have risen by 7.7% in the year leading up to March 2025. This adjustment aims to support private hospitals during a period of financial strain and to ensure the continued delivery of quality health care services. - read more
In a significant policy shift, Australian health insurers will begin offering rebates for a range of natural therapies, including Yoga, Pilates, Tai Chi, Shiatsu, Naturopathy, Western herbal medicine, and the Alexander Technique, starting early 2026. This change follows legislative amendments allowing these therapies to be covered under private health insurance for the treatment of health conditions or as part of health management programs. - read more
As 2026 approaches, Australian insurers are facing a trio of pressing challenges: rising premium costs and shrinking insurability, escalating cyber and data risks, and increasing difficulty in hiring and retaining skilled workers. These concerns have been highlighted in industry feedback cited in Gallagher Bassett’s upcoming report, 'The Carrier Perspective: 2026 Claims Insights.' - read more
In recent times, Australian consumers have been grappling with substantial increases in insurance premiums, prompting widespread concern and calls for greater transparency within the industry. Reports indicate that some policyholders have experienced premium hikes of up to 600%, leaving many questioning the justification behind such steep increases. - read more
In the realm of securing one’s health and wellbeing, navigating the Australian health insurance landscape can be as critical as the care received. It stands as a complex tapestry, woven with policies, premiums, and government incentives, affecting individuals and families nationwide. - read more
Private health insurance is an essential consideration for many Australians. It provides peace of mind, knowing that you and your family have access to the best possible healthcare when needed. - read more
The current health insurance landscape in Australia can be quite confusing for many people. With numerous options available, it’s not always clear which to choose to balance your budget with your needs. Premiums are on the rise, and Australians are becoming increasingly concerned about the costs of maintaining adequate coverage. - read more
Australia is renowned for its iconic landmarks, diverse ecosystems, and robust healthcare system. While the public healthcare system, Medicare, provides essential health services, it might not cover everything. The allure of private health coverage lies in its promise of broader options, reduced wait times, and coverage for services not included in Medicare, like dental and optical care. - read more
Finding the right health insurance coverage is a critical concern for Australian seniors, who often face the dual challenge of managing chronic health conditions and maintaining financial stability in retirement. As the cost of healthcare continues to rise, the importance of securing an affordable health cover that still meets their needs cannot be overstated. - read more
Knowledgebase
Proximate Cause: The primary cause of loss in an insurance claim, which sets in motion a chain of events leading to the damage or injury.
