Claims Delays Put Life Insurance Service Standards in Focus

The failures occurred between July 2023 and May 2025 and resulted in 358 breaches of the Life Insurance Code of Practice. Some affected customers reportedly waited more than eight months, with the insurer later paying a combined $160,000 in interest to 101 eligible customers. The committee issued a formal warning and required an independent audit of the insurer’s compliance processes, including how it requests information, monitors claim progress and applies corrective actions.

For income protection insurance customers, the case is a timely reminder that the value of a policy is not measured only by the monthly benefit amount or the premium. Claims experience matters. When illness or injury interrupts work, delays can create pressure around mortgage repayments, rent, business expenses, medical costs and everyday bills. A policyholder may have chosen an appropriate waiting period and benefit period, but poor communication during a claim can still undermine confidence at the moment support is most needed.

The practical lesson is to be organised before a claim is ever required. Policyholders should keep copies of policy schedules, income records, medical certificates, superannuation insurance details and correspondence with their insurer. If a claim is lodged, it is worth asking early what evidence is required, who is managing the claim and when the next update should be expected. Clear written records can help reduce confusion if delays arise.

The case also reinforces the importance of reviewing cover before problems occur. Australians comparing income protection insurance should look beyond headline premiums and consider definitions, exclusions, waiting periods, benefit periods, offsets and claims support. Those who are self-employed, have variable income or work in higher-risk occupations may benefit from broker support before choosing or changing cover.

While the insurer in this case self-reported the issue and took corrective steps, the broader message for consumers is simple: timely claims handling is not a luxury. It is central to the purpose of life and income protection cover. Anyone reviewing their current arrangements should compare cover options with both affordability and claim reliability in mind.