Data delivers new transparency on Life Insurance

By Lachlan Colquhoun

A new data project designed to increase transparency and enhance consumer outcomes in life insurance was announced at the FSC Summit 2018.

FSC chief executive Sally Loane announced details of the project, which aggregates industry data to show – for the first time – how much the industry pays in claims per impairment.

The data is broken down and analysed both in terms of dollar values, and by the number of Australians who receive the benefit. 

The culmination of two years of work with the industry and regulators ASIC and APRA, Loane said the multi million dollar investment would “provide the evidence the industry needs to better design the products of the future.”

“It will address what has been one of our major shortcomings – the absence of an industry approach to the collection of aggregate industry data,” she said.

“The vision for the project is that over time, the industry will be able to collect meaningful data from the product development stage through to claim, all done in real time.”

Loane said that using this data would help insurers identify opportunities for greater efficiency, which would then deliver greater affordability and sustainability to life products.

To use one example, data on how much is paid out annually in mental health claims would be valuable in informing the developing of future public policy.

Also at the Summit, the FSC announced it would extend its binding Life Insurance Code of Practice to cover superannuation trustees.

This would extend the code to the FSC’s 15 superannuation trustee members which together account for around $500 billion across more than 12 million superannuation accounts.

Including trustees would mean that consumers will be able to find the minimum service standards they can expect from insurers and superannuation trustees, such as paying income protection claims within two months and keeping customers appraised of progress at least every 20 days.

Chief executive Sally Loane said extending the code would be achieved by adding a new standalone chapter in the existing Life Insurance Code of Practice, which is enforced by the independent Life Code Compliance Committee and administered by the Financial Ombudsman Service, soon to be the Australian Financial Complaints Authority.

Loane said the Code of Practice was building trust for consumers in several ways: it is mandatory for FSC members, is overseen by an independent body with the power to administer sanctions, and it is also written in a language consumers can understand.