The Australian Prudential Regulation Authority (APRA) has been told that making public the claims-handling performance of individual life insurance companies would make it easier for financial advisers to act in the best interests of their clients.
The Association of Financial Advisers (AFA) has told APRA that failure to make such information available on an individual insurer basis would represent a lost opportunity.
The AFA said it believed making the individual insurance company claims information public would be beneficial at two levels.
“The first level is that this information is useful for financial advisers who provide advice to clients with respect to insurance cover,” it said. “We also believe that there is a public benefit in understanding the claims payment information and ratios of different providers of life insurance products.”
In doing so, the AFA said that it accepted that there could be detriment to the commercial interests of particular insurers who performed poorly in the reported results.
“However, the reporting of this information is in the public interest and will most likely have a positive competitive influence on the overall insurance market,” the AFA said. “We do not support the non-disclosure of information simply on the grounds that poor relative results might have a detrimental impact upon the commercial interests of the insurer.”
The AFA also pointed out that it would be very difficult for the general public to make sense of the information because of the volume across different products, channels and life insurers.
“There is a risk that this information will be misunderstood and even misreported,” it said. “We believe that the agencies need to be aware of this risk and to take appropriate action if required, including if it is misreported.”
The AFA suggested that a simplified version could be made available for the general public.
“We also believe that this information would be useful for the public to understand the differences between insurance acquired through financial advisers versus Direct or via Group Superannuation,” it said.