Are insurers applying a finer filter?
Insurers and reinsurers appear to be tightening their guidelines around who they will and will not insure and using online applications processes as a filter, according to analysis from life insurance comparison website, lifeinsurancedirect.com.au
The company's chief executive, Russell Cain has pointed to data collected over three years which reveals that it is now harder to get all forms of life insurance — life, income protection, trauma and total and permanent disability (TPD) than it has been in the past.
He said the data, collected by his firm, revealed that in the period July-December 2012, the overall success rate for people applying for life insurance (insurability) was around 80 (80.04) per cent, while in the January-June 2015 period, insurability had dropped to almost 76 (75.85) per cent.
Cain said the explanation for this decline may lie in the manner in which insurers are using technology as a filter.
"We are not underwriters, but what we have noticed is that, over time, life insurers have embraced the use of electronic applications and electronic applications make it quick and easy for insurers to detect certain risk factors and reject people on the basis of those risks," he said. "If, for example, the person applying for insurance has a certain pre-existing condition the computer can automatically reject the application. It's just a simple matter of programming."
Cain suggested that increasing claims might also be a factor in circumstances where his firm had observed that more people were being paid claims on insurance policies than in the past.
"We assume that's been affecting the insurers' bottom line. We therefore believe insurers and reinsurers have been tightening their guidelines around who they will and will not insure and technology makes this decision easier for them," he said.
"What all this means in plain English is that we believe insurers are looking more closely at your health, occupation and pastimes before they agree to insure you," Cain said.
He said that, disappointingly, while most industries were using technology and data to deliver more value to customers, life insurers and banks seemed to be using it to grow their own profits.
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