New APRA data validates life/risk advisers

New insurance claims data released by the Australian Prudential Regulation Authority (APRA) appears to have validated the role of life/risk advisers.

The data, released for the first time today, has found that, generally, clients are more likely to have success with an insurance claim if they have used an adviser.

It found that “advised business shows higher admittance rates than Individual non-advised for the same cover type”.

“This could be due to the policyholder having clearer expectations up front of what is covered by the product, or (related to the previous point) the adviser discouraging the policyholder from lodging a claim that is not covered by the policy,” the APRA analysis said.

It said the exception was Individual Advised Accident, which had an unusually low admittance rate.

“However, as noted above the number of observations is quite small (116 finalised claims, versus 3,260 for Non-Advised), plus the agencies were informed by the main writer of this product of some existing data limitations that have reduced the accuracy of their reported results.

The APRA analysis found that across all types of distribution channels, the admittance rate of claims was 92 per cent.

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92% sounds OK, but it isn't good enough. Anything that can be done to ensure reliable cover, should be done. You wouldn't fly in a plane that has a 92% chance of reaching its destination. Getting this right is critical. Accepting that 8% shouldn't have expected to be able to rely on cover should sound alarm bells, not taken as the industry as a whole (both advised and non advised) is tracking ok.

I think you may find most of those 8% declines were people trying to claim for conditions that would be readily admitted as an IP or trauma claim, but the insured was trying to claim on TPD because the only disability insurance they had was the default cover in their super.

Default TPD in super gives people a false sense of security, and ultimately leads to significant underinsurance. It should be abolished.

Pretty difficult to ensure that there is adequate and appropriate disclosure 100% of the time. The 8% would largely pertain to non-disclosure but there would still be some claims that were denied because they were not legitimate claims to begin with, despite the fact that they had an adviser attached.

I think it would be great if insurers had more effective claims pre-assessment teams to reduce the amount of illegitimate claims.

Tell us something we didn't know! Only problem is the government doesn't want us to be able to earn a living from the role. Before LIF we could advise on risk and be reasonable paid. Post LIF and growing compliance the commission is not enough to cover costs but clients don't want to pay a fee. Under commissions we were able to provide claims services at no cost to customers. If commissions are banned what do we do? Charge a fee for something that was previously free or have the client rely on dealing directly with the insurance company? Can any of these idiots see the problem?

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