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The Risk Store


the go-to place for practical, quality, technical life insurance support and expertise for financial advisers including claims process management for insurers and industry super funds

An open letter to our regulator and an appeal to insurers
Dear Regulator: Be Careful What You Wish For
We have watched and waited for two weeks and now it’s time for The Risk Store to make comment on the ASIC 498 report and the resulting dialogue and to caution both regulators and insurers. There is a groundswell of reaction arising from 498 findings that could lead to actions and outcomes we could all have stopped and didn’t. This, therefore, is our heartfelt warning of specifically what the ‘decline rates’ conversation could lead to if allowed to snowball in its current direction. If anyone else has recognised the dangers, they are not going public with it. So we are.

No beating about the bush: we are extremely concerned about the very real potential for irreversible damage to the sustainability of the industry, if ASIC hang their regulator’s hat on the publishing of decline rates for a perceived benefit to consumers in their decision-making over which insurer to select. These will not contribute to informed decisions – but that’s not the main worry.

“it is important to acknowledge
that not all claims will be successful”- ASIC

Firstly, it isn’t clear how any randomly selected percentage of declines could be drawn in the sand, by anyone, as a benchmark that has reasonableness or comparability or otherwise. Let alone that amid the noise out there, one fact will be obvious to anyone with industry experience but it is not being acknowledged in media releases and commentary: ‘declines’ as a label encompasses a dozen different reasons why claims are not paid - this detail must be understood to be useful to any audience. And while ASIC do say within the report “…it is important to acknowledge that not all claims will be successful…even though they may not be entitled to payment for a loss not covered by the contract, policyholders can (and do) lodge claims in these circumstances”, their subsequent public statements fail to draw this fact into the open. This means ASIC’s media message is coming across as ‘claimants (all) have a right to be paid’. So media outlets have followed suit and bizarrely forgotten that the key principle of any insurance pricing is that if claims are not assessed and deemed to fit (or not) within set terms and conditions, then premiums cannot be sustained at affordable levels. Why is the industry not calling this out?

Secondly, claims data is ridiculously inconsistent in Australia. Even claims causes, which are generally reported elsewhere by using an international code which our collective industry doesn’t use, are impossible to properly collate here. The Risk Store has experienced that first hand for ten years as we have wrestled with gathering and publishing annual industry claims paid and causes statistics, to the best quality we can muster from what we are given...

Read the full open letter (PDF) here

Dealer Group Membership


Ideal for dealer groups with 15 advisers or more

  • We now offer a corporate membership plan as well as individual memberships.
  • It is a flat fee regardless of the size of your adviser network.
  • So the more advisers you have, the better value your corporate membership will be.
  • Includes access to our technical helpline and helpline archive.
  • Includes member discounts off our risk personal & business SoA templates
  • No joining fee

Call or email Pete Wincott at The Risk Store for more details on
02 4998 6977

Risk Read Archive Library

NOW WITH OVER 175 (and constantly being added to with new editions) ARCHIVED CASE STUDIES, stories, tales and general commentary from the last 10 years of the risk store

These archives can be accessed from the risk store website > risk read section > risk read archive library

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