Recent insurance scandals with insurers showing a belligerent attitude to paying claims may have left some of us forgetting that insurers actually do pay claims. You wouldn’t think so, given some of the media coverage, but Australian life insurers pay out a significant amount in claims each year.
Here’s the proof.
Australian life insurance claims paid by major insurers surpassed $9 billion in total for the first time in 2016. With that in mind, we’ve decided to take a look at the claims statistics from two insurers who each paid out over $1 billion in claims during 2016.
The insurers are AIA and AMP Life.
To highlight how these insurers are seen in the market place, in a recent Adviser Ratings research survey AIA were rated in the top three by advisers overall for claims handling. In contrast, AMP was rated mid pack for claims handling in each insurance category.
However, the advisers who chose to offer additional commentary on AMP Life weren’t overly positive in their responses. Comments offered on AMP Life were 72% negative, in contrast the comments on AIA were 76% positive.
Before we’re accused of giving the insurers an easy ride, bear in mind the following claim stats come from company marketing documents and don’t include rejected claims stats. The insurers statistical groupings are different, yet they do highlight an important point – the old “it won’t happen to me” strategy isn’t a wise one. The average person does fall victim to injury, disability, illness and premature death.
According to AIA, they paid out $3.16 million per day. Overall their biggest monetary claim area in 2016 was death at 45.5% (or as the industry calls it life cover), followed by total and permanent disability (TPD) at 26.4% of claims, income protection at 23.2% and trauma insurance at 4.8% of claims.
The breakdown of life cover claims paid at AIA was 62.3% male and 37.7% female, 56.5% of claims paid were between the ages of 45-65, with 38% of life cover claims paid being the result of cancer.
TPD claims paid at AIA were again majority male, 56.2% compared to 43.8% with 30.3% of them relating to musculoskeletal issues and 30.1% relating to cancer, respiratory, infectious diseases, 17.7% were mental health related and 12.4% were paid for consequences of injuries.
AMP Life paid out $2.9 million in claims per day, with cancer resulting in 45% of life cover claims paid with heart attack & stroke resulting in 19% of life cover claims. The average age of a life claim paid was 53-year-old.
TPD claims paid at AMP Life had an average age of 49, with the largest claim area being musculoskeletal at 25%, with mental health following with 19% of claims paid.
While sobering reading, it is a reminder that insurers (for the most part) actually do come through.
The other factor worthy of note is the age or age bracket where vulnerability appears highest. At AMP the average age for all claims was 52 years old, while at AIA the 45-55 age bracket saw the highest percentage of claims in each of the four insurance cover areas.
Finally, back to that Adviser Ratings research survey. Who was the worst rated by advisers for claims handling and approval?
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.