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APRA warning on hard line insurers
The Australian Prudential Regulation Authority (APRA) has warned insurers not to simply take a harder line on insurance claims to help overcome recent profitability issues.
In a discussion document issued to insurance companies this week covering the situation in the group insurance market, the regulator has noted the changes which have occurred within the sector and said it was encouraging insurers to "review their claims assessment procedures and make improvements where appropriate to incorporate lessons learned".
"APRA would be concerned if insurers chose simply to take a 'harder line' in considering claims in an effort to reduce claims costs," the discussion paper said.
It said insurers needed to be satisfied that claims were assessed fairly and in accordance with the policy terms.
"This is an important requirement in order for the board to be confident that it is meeting its obligations under section 48 of the Life Insurance Act 1995," the discussion paper said.
It said recent circumstances had highlighted the importance of a clear claims philosophy; "and the need for insurers and trustees to have a deep and shared understanding of how claims will be dealt with".
"If an insurer seeks to change its approach to dealing with claims, this would typically be reflected in its claims philosophy and discussed with the trustee," the regulator's discussion said.
It said APRA considered that active dialogue between insurers and trustees on this issue "builds trust between the parties and we encourage insurers and trustees to discuss in detail proposed changes to the claims philosophy or approach before they are implemented".
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