A proposed parliamentary investigation into Australia’s $44 billion life insurance industry will put major insurers under the gun and ask the question, does the sector need greater oversight? Insurers are under fire due to a number of negative revelations that have emerged in recent times.
For those making total or permanent disability (TPD) claims, the inquiry should offer a number of answers to questions around payouts and the claims process in general.
Ethical issues demand government intervention
Following the news that Commonwealth Bank’s CommInsure arm was systematically excluding certain people, Nationals senator John Williams proposed the parliamentary joint committee set up an inquiry.
The series of scandals that have rocked the industry include, the use of surveillance tactic and ploys to avoid paying claims. The committee will look at where further oversight is applicable from the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA). In addition, the committee will look into company operations and decide whether they’re enacting unethical policies and practices in an effort to avoid meeting their claims obligations.
Speaking about the inquiry, Senator Williams said that the committee will help to determine whether the refusal to pay legitimate claims was widespread in the industry. He pointed out that people had engaged him about the practices and urged parliament to scrutinise the sector.
Life insurance of particular importance
One area that should receive a large focus is the life insurance industry. As it tends to be taken out part of superannuation packages, it tends to get very little attention.
With the Australian Bureau of Statistics showing that the county’s aged population had increased by 20 per cent since 2010, there is a special onus to ensure that older Australians have what they need.
APRA member Geoff Summerhayes said the industry is under pressure as it faces a number of issues, from culture to conduct. Speaking about stress tests, he said: “Insurers should not just think about adverse events arising from elsewhere; they should also ask the more uncomfortable question: “what if we are at the heart of the problem?”.
The question asked by Mr Summerhayes is a pertinent one. Anyone who has made a superannuation claim knows the stress it can cause. The commissions findings are to be delivered in mid-2017, and witch actual reforms further afield, it is important to find a solution for today.
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