Claims handling key to group sustainability
With the group life sector grappling with balance sheet issues and premium increases, actuarial consultancy, Rice Warner, has produced a report based on five years' of claims which it believes provides key insights, including the degree to which claims handling practices can impact overall outcomes.
Rice Warner's Australian Group Risk Report points to a direct correlation between claims waiting periods and a person's capacity to return to work faster.
Confirming the findings of a recent Super Review panel on problems impacting the life/risk industry, the Rice Warner research found that waiting periods had a significant impact on Income Protection return to work practices.
It found there was a 68 per cent higher chance that a claimant on a 30-day waiting period would not be on claim within 12 months, compared to a claimant on a 90-day waiting period
The statistics also showed how long-term income protection claimants who notified within the first six months were more than 40 per cent more likely to return to work within a year, compared to claimants reporting their disability in the second six months.
Rice Warner outlined the other key findings of its report as being:
Occupations affect claim reporting delays: the delay for hazardous occupations is 60 percent higher than that for professional occupations.
Waiting period has a significant impact on Income Protection return to work statistics. There is a 68 percent higher chance that a claimant on a 30-day waiting period will not be on claim within 12 months, compared to a claimant on a 90-day waiting period.
For TPD claims, musculoskeletal claims represent approximately a third of all claims for all members (excluding younger ages, where accidents/poisons/crimes are the highest), and are at least twice as likely to be the cause of claim than from any other claim type. Mental/stress claims peak at over 20 percent of all claims for members aged 30 to 39, the highest proportion for any age band.
Mental/stress claims feature as the most common Income Protection claim cause for middle aged people, and musculoskeletal claims are prominent among members over age 50.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
