The Australian Securities and Investments Fee (ASIC) has warned it may take motion in opposition to particular person incapacity earnings insurance coverage (DII) suppliers, after its evaluate discovered some are utilizing “intrusive measures” resembling bodily surveillance with out foundation to evaluate claims.
Bodily surveillance was performed in 1% or 57 of the virtually 4800 particular person DII claims acquired between January and June final yr, the ASIC evaluate discovered.
ASIC says use of surveillance could have been unwarranted in 17.5% of these claims as a result of the insurer had not proven that different investigative strategies had been exhausted.
The evaluate additionally discovered bodily surveillance was utilized in 10 psychological well being claims and ASIC considers that surveillance could have been unwarranted in half of those circumstances.
Round 5% or 252 claims have been topic to non-disclosure investigations and 5 insurers appeared to start the probes solely on the idea that the declare was lodged inside three years of coverage inception or renewal, heightening the chance of “fishing”, ASIC stated.
“Following the evaluate, we stay involved that some insurers nonetheless look like ‘fishing’ for non-disclosures to keep away from paying out respectable claims,” Deputy Chair Karen Chester stated.
“We’re placing insurers on discover that we’ll take motion the place we see client hurt from poor claims dealing with practices.”
She says the regulator can also be involved over dealing with of psychological well being claims and investigations.
“Non-disclosure investigations and bodily surveillance are intrusive measures and insurers should guarantee they’ve affordable grounds to undertake them,” Ms Chester stated. “We count on bodily surveillances for use as a final resort solely.”
Ms Chester says the evaluate – just like the one on complete and everlasting incapacity it carried out after the Hayne royal fee – sought to check whether or not insurers have been now entrenching good practices, particularly with the trade now being topic to new claims dealing with obligations.
ASIC says it has written to the life insurers lined by the evaluate to stipulate areas for enchancment and talk expectations for his or her use of investigative instruments, together with the duty to deal with claims effectively, truthfully and pretty.
Life insurers who took half within the evaluate are AIA, Tal, Zurich, MLC, Decision Life Australasia and Westpac Life (now Tal Life as of August 1).