16 March 2023

Surge in reported complaints puts insurers on notice

Life insurers reported a significant increase in complaints in 2021-22, prompting the Life Code Compliance Committee (LCCC) to urge the industry to see this as an opportunity for improvements in the coming year.

The LCCC’s 2021-22 Annual Data and Compliance Report, published today, notes that complaints about all benefit types increased in the reporting period, in some cases by thousands.

While changes to regulatory requirements may have contributed to the increase, Chair of the LCCC Jan McClelland AM said that life insurers could do more to mitigate reasons for 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,” Ms 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.”

“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.”

The report also found that many subscribers were still reporting breaches of the requirement to issue compliant annual notices to customers.
In addressing this finding, Ms McClelland noted that it was an issue that all subscribers had the capacity to overcome.

“Issuing compliant notices is critically important and it is something every subscriber must do,” she said.

“Doing so helps customers understand their policies and reminds them to consider their cover and whether it remains appropriate.

“Overcoming this issue is a matter of having the right quality checks and controls in place to ensure letters and notifications meet the obligations set out in the Code.

“Compliant notices must be the norm and we expect that all subscribers will review their systems and measures for quality control as soon as possible to reduce these avoidable breaches.”

The 2021-22 Annual Data and Compliance Report also noted important positive developments across the year for life insurers.

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

“It is great to see fewer people caught up in breach events,” Ms 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.”

The LCCC’s 2021-22 Annual Data and Compliance Report provides an insight into the life insurance industry in 2021-22 and is available for download now.

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