The Australian life insurance sector is undergoing notable shifts in claims experience, dispute handling, and policyholder behaviour, according to the latest data released by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) for the 12 months ending Dec. 31, 2024 (FY24).
APRA’s latest Life Insurance Claims and Disputes Statistics report provides an overview of performance across 17 life insurers operating in Australia’s direct market. It includes metrics such as claim admittance rates, processing timelines, and dispute outcomes.
Meanwhile, ASIC’s updated MoneySmart comparison tool, updated with the latest data, evaluates insurer performance across multiple distribution channels.
Acceptance of life insurance claims remained highest in death cover, with group super products showing a 99% admittance rate, followed by 98% for group ordinary.
Total and permanent disability (TPD) claims showed wider variation, from 84% in advised individual products to 92% in group super. Income protection (DII) and trauma insurance followed with admittance rates above 85% in most channels.
When examining claims payout ratios, group super led across most categories – paying out 81% of premiums in death claims and 100% in TPD. Individual DII claims were notable for paying more than premiums collected, with group ordinary DII paying out at 119%.
Processing speed varied by product. Most death claims were resolved within two weeks, with only 1% taking more than 12 months. TPD claims had the longest average duration at four months, with a significant portion (37%) resolved between two and six months.
Disputes remained concentrated in certain product lines. DII policies recorded the highest dispute lodgement rates, especially among non-advised individual policies, with 410 disputes per 100,000 insured lives. Conversely, dispute rates for group death policies were significantly lower.
More than 80% of disputes across most categories were closed within 45 days. TPD claims had the slowest resolution, averaging 2.5 months. Across all resolved disputes, insurers upheld original decisions in the majority of cases. However, between 5% and 9% were overturned, most often following the submission of additional documentation or upon review of earlier assessments.
The data coincides with latest findings from the Council of Australian Life Insurers (CALI), which revealed that 39% of Australians would seek government financial support if mental illness impacted their employment – an increase attributed to rising household costs. This preference has surpassed reliance on personal networks such as family or friends.
Affordability has emerged as a primary barrier to coverage, with 62% of survey respondents citing cost concerns as the main reason for not obtaining or maintaining life insurance. Lower-income groups, particularly those earning below $100,000 annually, were more likely to express difficulty affording cover. Gender differences also emerged – 53% of women said they could not afford life insurance, compared to 33% of men.
A report commissioned by CALI and produced by KPMG found a significant rise in TPD claims linked to mental health.
Since 2014, claims in this category among Australians aged 30 to 40 have increased more than sevenfold. The average claimant age for mental health-related TPD has dropped to 46, compared to 49 a decade ago. Physical disability claims, in contrast, have not shown a similar shift in age profile.
Men were approximately 60% more likely than women to file a TPD claim due to mental health issues.
