Life 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, life insurance claims statistics and information from a variety of sources.

Life insurance companies issue policies for Death/Terminal Illness, TPD, Trauma and Income Protection insurance.

What percentage of life insurance claims are paid overall?

We know from studies done by ASIC and APRA that, for the life insurance 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 to 2021.

The percentage of claims paid varies depending on the type of insurance. The percentage of Life insurance and Income Protection claims paid is typically 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.

How have individual life insurance companies performed?

In March 2019 ASIC and APRA released for the first time statistics on the payout rates of individual insurers. The latest data, released 19 April 2022, covers claims for the 12 month period ending 31 December 2021.

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 life insurance 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 

 
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 2021 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.

2021 Life Insurance Claims Statistics –

For life insurance claims, the industry average acceptance rate in 2021 was 97.1%.

TAL had the lowest claims acceptance rate of 95.8% and OnePath the highest acceptance rate of 98.7%.

The average time for a life insurance claim to be accepted was 1.5 months.

Resolution Life/AMP paid claims the fastest at 0.8 months on average with the slowest being MLC at 2.0 months.

2021 TPD Insurance Claims Statistics –

For TPD insurance claims the industry average acceptance rate in 2021 was 82.5%.

AIA had the lowest claims acceptance rate of 67.7% and Resolution Life/AMP the highest acceptance rate of 89.2%.

The average time for a TPD insurance claim to be accepted was 7.4 months.

There was significant variation between the fastest paying insurer Resolution Life/AMP at 5.4 months on average and the slowest being OnePath at 9.6 months.

2021 Trauma Insurance Claims Statistics –

For Trauma insurance claims, the industry average acceptance rate in 2021 was 86.8%.

OnePath had the lowest claims acceptance rate of 83.2% and Zurich the highest acceptance rate of 91.2%.

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

TAL paid claims the fastest on average at 1.1 month with the slowest being OnePath at 2.1 months.

2021 Income Protection Claims Statistics –

For Income Protection insurance claims, the industry average acceptance rate in 2021 was 95.0%.

AIA had the lowest claims acceptance rate of 91.5% and CommInsure the highest acceptance rate of 97.6%.

The average time for an Income Protection insurance claim to be accepted was 1.6 months.

TAL were the fastest payer on average at 1.2 months with the slowest being Clearview at 3.1 months.

Under the FSC 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 life insurers have the most claims disputes?

In 2020/21 the Australian Financial Complaints Authority (AFCA) handled 70,510 disputes related to financial services. Of these, only 2% were related to life insurance including TPD, Trauma and income protection insurance. The biggest source of disputes was in the area of banking and finance which accounted for 60% of the total, followed by general insurance (i.e. car, house etc) at 24%.

ASIC and APRA have also released claims dispute statistics for individual companies for the year ending 31 December 2021. These statistics include disputes lodged with an insurer, an external dispute resolution scheme like 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 shown below is for policies taken out through financial advisers/brokers only).

On this adjusted basis in 2021 Resolution Life/AMP had the highest number of disputes for Trauma and Income Protection policies, while Zurich had the highest number of disputes for Life policies and OnePath had the highest 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 life insurance claims statistics show?

The overall claims statistics show that claims do get paid and in very large numbers.  The Financial Services Council released aggregate figures across the whole Australian life insurance market showing that in 2019 over 100,000 claims were paid 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.

Below we have included the detailed claims statistics from 2020 provided by the three largest life insurance companies in Australia – TAL, AIA and Zurich (including OnePath).  These provide 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.

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