Top 8 takeouts from the Life Insurance Survey 2016

Posted by Bethany Shaw on 19 December 2016

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This survey, conducted by Adviser Ratings, attempted to provide insight into insurance claims by surveying those at the coal face of the claims process - financial and risk advisers. Advisers were also asked to rate and comment on group life and direct life policies, given many clients seek advice in relation to these insurers and their policies.

1. There were higher claims denial rates in relation to insurance policies sold direct to consumers with no financial advice (compared to policies sold through advisers and group insurance policies).

2. Direct life insurance provide the poorest claims experience in terms of claims handling and approval rates.

3. Banks have less than half the number of insurers on their Approved Product Lists (APL) than the rest of the market.

4. AFRM Preferred Insurers (Retail Insurers) are rated  the best insurers in the market when it comes to claims handling and approval rates.

5. Advisers find the claims experience with group life insurers/ policies harder than with retail life insurers/ policies, as the policies are more difficult to claim on. 

6. Standardised Definitions can improve outcomes for consumers. It is difficult for advisers and their clients to compare definitions across the different insurers, as well as the fact certain insurers are not updating their definitions regularly.

7. Exclusions and loadings result in lower insurance coverage. There is a perception by advisers that exclusions have increased and loadings have decreased meaning a lot of people are not getting insured.

8. The length of time to claim can be a problem for claimants. The most common complaint among advisers is that whilst claims approval rates are relatively high, the length of time to claim is becoming longer and is of particular concern when it comes to TPD claims “when approvals require faster turnaround time”.


Retail insurance

Retail insurance is cover that is provided by some of the major life insurers in Australia. It is generally only available through a financial adviser. These products are generally fully medically and financially underwritten and provide greater flexibility, customisation and additional policy options compared with direct or group insurance.

Direct insurance

Direct life insurance is life insurance you can buy direct, either from insurance companies or financial institutions. There is no involvement by a financial adviser, requiring nil or minimal medical information and applications can be completed online, in the branch or over the phone.

Group life insurance

A group insurance policy is cover that is designed to cover multiple people under the one policy. It is generally available for the corporate sector or superannuation funds. In most cases, the people covered must share a commonality, either employees at the same company or members of the same super fund.

Approved product list

A list of preselected insurance policies that are deemed fit for purchase by an adviser of a licensee. The intent is to limit the advisers array of choices to policies available on the licensee’s approved list.

*This report is a release of the summary findings conducted by Adviser Ratings in its 2016 Adviser Sentiment Life Insurance Report conducted with 1,017 financial advisers between 18 October 2016 and 9 November 2016. Thank you to Adviser Ratings for allowing us to share information from this report. The full report can be found here.

Please note, this information has been prepared by Australian Financial Risk Management Pty Ltd (AFRM) ABN 21 001 696 868. AFRM hold an Australian Financial Services License (AFSL) 237186. The information is for general purposes only and has been prepared without taking account of your objectives, financial situation or needs. AFRM recommends that you seek professional advice before acting on any information contained herein.