Life insurers face concerning number of complaints

LCCC Chair Jan McClelland AM said changes to regulatory requirements might have contributed to the increase in complaints.

“Changes to ASIC requirements meant complaints were defined more broadly and subscribers had to record and report more instances. No doubt this was a factor. But, fundamentally, focussing on good practices that produce good outcomes for consumers will go a long way to mitigating issues,” McClelland said. “Meeting a customer’s needs with a product and service while complying with code obligations is generally going to see a subscriber avoid complaints, no matter how broadly they’re defined.”

LCCC issues advice for life insurers

The LCCC encouraged life insurers to see the current issue as an opportunity for improvements in the coming year.

“We always encourage improvement, and we see this as another opportunity for subscribers to improve. Having had time to set up systems and processes to reflect regulatory changes, subscribers should be able to reduce complaints over the next 12 months,” McClelland said.

Last year, the LCCC called on life insurers to improve their compliance reporting after seeing gaps in the Australian life insurance industry., including an increase in breaches reported by consumers while subscribers report low numbers of significant breaches.

Positive developments across the year for life insurers

Despite the significant number of complaints against life insurers in 2021-22, the LCCC has a positive industry outlook.

The report stated that “breach events” – single events that result in multiple breaches of a code section – had come down significantly in 2021-22. Consequently, the number of customers affected by these events was cut in half during the same period.

“It is great to see fewer people caught up in breach events,” McClelland said. “Subscribers cited improvements to systems and processes, as well as better awareness of the code among staff, for this result.

“Pursuing the best outcomes for customers should always be at the forefront of operations for subscribers, and improvements that work towards this goal are always worthwhile.”