ASIC asks life insurers to review their claims payment systems

ASIC is ordering life insurers to check the accuracy of their systems and controls for claims calculations and payments. This came after the identification of system failures after the incorrect application of consumer price indexation to life insurance policy benefits and other benefit payment mistakes.

ASIC got breach reports from 7 life insurers for the miscalculation of life insurance benefits. The errors caused the affected customers to be either under or overpaid on their claims. The 7 insurers have executed system fixes over the last three years. They have each started, under which six have completed customer remediation programs.

“Consumers need to have confidence that their insurers will calculate and pay their claims accurately. With seven life insurers now having self-reported this breach to us, we are calling on all remaining life insurers to ’review to ensure’ that this problem does not extend to them”, ASIC Deputy Chair Karen Chester said.

ASIC believes that remaining life insurers should review the efficacy of their systems and controls for claims calculations and payments to ensure that all consumers receive the product benefits and features promised.

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