Insurance Claims Statistics – All the facts and figures

Which are the best life insurance companies for paying claims?

The number one question we get asked at Insurance Watch is “Do life insurance companies really pay claims?”.

In order to address this question we have gathered together, all in one place, insurance claims statistics and information from a variety of sources.

What do the industry regulators say about insurance claims payout rates?

We know from studies done by ASIC and APRA that, for the industry as a whole, more than 90% of all claims are being paid.  The overall percentage of claims paid was between 92% and 94% in the years 2016, 2017, 2018 and 2019.

The percentage of claims paid varies depending on the type of insurance. The percentage paid for Life insurance and Income Protection claims typically is higher than for TPD and Trauma claims.

ASIC has also found that direct life insurance had a lower claims payout ratio than fully underwritten policies taken out through advisers/brokers.

The following infographic from ASIC summarises the findings of their 2016 report into claims handling.

In March 2019 ASIC and APRA released for the first time statistics on the payout rates of individual insurers for the 12 month period ending 30 June 2018. The latest data, released 21 April 2020, covers the 12 month period ending 31 December 2019.

For each life insurance company these statistics show:

• – Average claims accepted rate, i.e. the percentage of claims an insurer accepted for payment out of all claims that were decided, and
• – Average claim time in months that it took for an insurer to decide whether or not to accept a claim.

Using the industry data for insurance policies taken out through a financial adviser/broker, Insurance Watch has collated the statistics across the four product types to rank companies based on their average deviation from the industry claims acceptance rates.

The table below shows our overall ranking of insurers for claims acceptance – from best (1st) to worst (10th).

Best Claims Paying Life Insurance Companies in 2018 and 2019

 
More information about each of these insurers can be found at Compare Life Insurance Companies.  To compare the policy benefits and premiums offered by these insurers use Compare Quotes Online.

The 2019 claims statistics (for policies taken out through financial advisers/brokers) are shown in the graphs below by different policy types e.g. Life, TPD, Trauma and Income Protection. Where no result is shown for an individual insurer this is because APRA have reported that the number of claims was too small to provide a reliable result.  Claims statistics for other sales channels can be viewed on MoneySmart.

Life Insurance Claims Statistics –

For life insurance claims, the industry average acceptance rate in 2019 was 96.8%.

CommInsure had the lowest claims acceptance rate of 91.7% and OnePath the highest acceptance rate of 99.1%.

The average time for a life insurance claim to be accepted was 1.7 months.

TAL paid claims the fastest at 1.1 months on average with the slowest being MLC at 2.5 months.

TPD Insurance Claims Statistics –

For TPD insurance claims the industry average acceptance rate in 2019 was 81.5%.

TAL had the lowest claims acceptance rate of 69.9% and CommInsure the highest acceptance rate of 90.2%.

The average time for a TPD insurance claim to be accepted was 6.1 months.

There was significant variation between insurers with the fastest being MLC at 4.3 months on average and the slowest being OnePath at 8.2 months.

Trauma Insurance Claims Statistics –

For Trauma insurance claims, the industry average acceptance rate in 2019 was 86.2%.

AMP had the lowest claims acceptance rate of 81% and MLC the highest acceptance rate of 89.3%.

The average time for a Trauma insurance claim to be accepted was 1.6 months.

MLC paid claims the fastest on average at 1 month with the slowest being CommInsure at 2.4 months.

Income Protection Claims Statistics –

For Income Protection insurance claims, the industry average acceptance rate in 2019 was 95.1%.

ClearView had the lowest claims acceptance rate of 88.8% and MLC the highest acceptance rate of 97.2%.

The average time for an Income Protection insurance claim to be accepted was 1.4 months.

MLC was the fastest on average at 1 month with the slowest being AIA at 1.9 months.

ASIC notes in its report that, under the Life Insurance Code of Practice, insurers should make their initial decision within 2 months of a claim for income protection and within 6 months for other cover types.

To compare the policies offered by the above insurance companies go to Compare Quotes Online Now

Which insurers have the most claims disputes?

In 2017/2018 the Financial Ombudsman Service (FOS) handled 22,962 disputes related to financial services. Of these, only 4% were related to life insurance including TPD, Trauma and income protection insurance. The biggest source of disputes was Credit (e.g. loans and mortgages) accounting for 43% of the total, followed by General insurance (e.g. car and home) at 32%.

ASIC and APRA have also released updated claims dispute statistics on an individual insurance company basis for the year ending 31 December 2019. These statistics include disputes lodged with an insurer, an external dispute resolution scheme like FOS or AFCA, or a Court or Tribunal. The reasons for these disputes include dissatisfaction with claims decisions, amount received or the claims process.

The absolute number of disputes need to be viewed relative to the number of lives insured by that insurer. Therefore the data from ASIC below shows for each insurer the number of disputes for every 100,000 people insured (data is for policies taken out through financial advisers/brokers).

On this adjusted basis in 2019 CommInsure had the highest number of disputes for Life, Trauma and income protection policies, while OnePath had the highest number of disputes for TPD policies.

What is the claims experience of other industry players?

Over time Insurance Watch has helped many of its customers to make successful claims on their policies.  In other parts of the website we provide examples of these Life Insurance, Trauma and Income Protection claims.  In our experience very few claims are declined, although non disclosure can put clients at risk.  As every claim is different in its circumstances, it is difficult to generalize these results across insurers.

A recent survey of advisers tried to obtain an industry wide perspective of the relative claims performance of insurance companies.  The survey results ranked insurers according to adviser perceptions of how the companies managed claims. However as the claims experience of each adviser may be limited, the results are likely to be subjective rather than based on factual data.

What is the experience of customers who have submitted claims?

Customer reviews have been left on our website by over 1,000 Life, TPD, Trauma and Income Protection policyholders.  From these we can learn about the claims experiences of individuals – both good and bad.  But again we can’t know the full circumstances behind each claim (e.g. were these superannuation or retail policies, was non-disclosure involved etc) or how indicative these particular claims are of an insurer’s overall performance.

What we do know is that good news stories often don’t often receive much publicity.  So we have collected claims videos from various insurers telling the moving stories of clients who have needed to make a claim and how this has made a difference to their lives and the lives of their families.

You can watch videos of their real life stories below:

Life Insurance and TPD Claims Stories
Trauma / Critical Illness Claims Stories
Income Protection Claims Stories

What do the detailed claims statistics from the insurance companies show?

Below we have collated the claims statistics from all the companies we cover including their latest published document giving a breakdown of claims paid.

The absolute dollar value of claims paid must be viewed in the context of the size of each insurer and their premiums in force.  In some cases the insurer has only provided claim statistics for the retail sector of the market, which does not include claims from group/super or direct policies.

Equally the mix of claims for each insurer will be influenced by the composition of their customers.  For example, each insurer has a different mix of Life/TPD/Trauma/Income Protection insurance policies, group/super versus individual/retail policies, policyholder ages and occupations.

What these statistics DO show is that claims get paid and in very large numbers.  The Financial Services Council has released aggregate figures across the whole Australian life insurance market which show that over 100,000 claims were paid during 2019 amounting to over $12 Billion.  This should give confidence to buyers of insurance policies that help will be there when they need it the most.

Compare the premiums and benefits offered by these companies at Compare Quotes Online

AIA

Total Claims Paid (2019): $305 M (Retail Only)

Death/Terminal Illness – $99 M

TPD – $22 M

Trauma – $88 M

Income Protection – $96 M

AMP

Total Claims Paid (2019): $1,144 M

Death/Terminal Illness – $400 M

TPD – $292 M

Trauma – $95 M

Income Protection – $357 M

ASTERON

Total Claims Paid (2017): $390 M

Death/Terminal Illness – $146.7 M

TPD – $46.5 M

Trauma – $61.3 M

Income Protection – $135.5 M

BT

Total Claims Paid (2018): $381 M

Death/Terminal Illness – $148 M

TPD – $68 M

Trauma – $82 M

Income Protection – $83 M

CLEARVIEW

Total Claims Paid (2019): $64 M

Death/Terminal Illness/TPD – $15 M

Trauma – 13 M

Income Protection – $36 M

COMMINSURE

Total Claims Paid (2019): $980 M

Death/Terminal Illness – $292 M

TPD – $301 M

Trauma – $90 M

Income Protection – $297 M

MLC

Total Claims Paid (2018): $602.5 M (Retail Only)

Death/Terminal Illness – $192.8 M

TPD – $78.3 M

Trauma – $138.6 M

Income Protection – $192.8 M

ONEPATH

Total Claims Paid (2019): $592 M (Retail Only)

Death/Terminal Illness – $170 M

TPD – $90 M

Trauma – $138 M

Income Protection – $194 M

TAL

Total Claims Paid (2019): $2,300 M

Death/Terminal Illness – $828 M

TPD/Trauma/Income Protection – $1,472 M

ZURICH

Total Claims Paid (2019): $305 M

Death/Terminal Illness – $113 M

TPD – $50 M

Trauma – $58 M

Income Protection – $84 M

Other useful information:

• – To find out how to make a claim watch the video “Understanding the Claims Process“
• – To compare quotes and benefits of the policies offered by the above insurance companies go to Compare Quotes Online Now
• – To find out who owns the above insurance companies, their size and their background go to Compare Insurance Companies
• – To obtain advice on your personal situation from one of our qualified advisers, including insurance strategies and policies to suit your needs, go to Get Advice