The corporate regulator’s moves toward greater life insurance claims data transparency comes with complexities and risks to consumers, according to law firm MinterEllison.
MinterEllison partner Richard Batten says the effective use of claims data is a complex issue, due to the fact that it is only as good as the nature of the data itself and the capacity to use it by those who have access.
“ASIC believes that some kind of data transparency around claims handling outcomes will benefit consumers, and I suppose it may potentially do that in different ways,” Mr Batten said Risk Adviser.
“The problem is that, unless data is very granular, it potentially doesn’t really, and it may disguise a lot of differences between products or circumstances.”
Mr Batten cites an example of a cheaper product that may have a worse claims rate outcome than a more expensive product, saying this could be due to a reflection on price and may not necessarily be the life company’s fault.
“The product may well be a suitable product for people generally at a lower price providing a lower level of protection, but still providing protection, just not every single circumstance that the person might like to be able to claim.
“So there is a price question there that won’t necessarily be easily reflected in claims data.”
Mr Batten said a greater transparency in claims data potentially creates an additional reason for a consumer to seek a policy through an adviser.
“Life insurance is potentially complex enough for the ordinary consumer,” he said.
“To potentially need advice in any case, the more data that is processed and understood, the more complex that data is and, obviously, the greater the need there is for professional assistance.”