Life Claims Inquiry Puts Delays Under Fresh Scrutiny

The report, released on 30 October 2026, reviewed claims data from the 2023-24 financial year across six insurers. It focused on claims where insurers had treated delays as being affected by circumstances beyond their control. That distinction is important: some life insurance claims are genuinely difficult to assess because medical, occupational, financial or trustee-related evidence may take time to gather. Even so, the inquiry found that insurer-controlled processes did not always move as early or as clearly as they could have.

The figures are notable. Insurers acknowledged that information should have been requested earlier in 42 of the 67 TPD claims reviewed and in 45 of the 116 income protection claims reviewed. The committee also found that communication and review commitments were not applied consistently when claims took longer to decide. Some insurers have already responded by strengthening correspondence, improving monitoring of longer claims, giving claims staff more technical support and, in some cases, providing remediation or reporting breaches.

For businesses using key person cover, the findings are a reminder that the quality of a policy is not tested only at application or renewal. Where TPD cover forms part of a business protection plan, the claims process may require evidence about incapacity, occupation, duties, ownership arrangements, financial impact and supporting medical information. If requests arrive late or are unclear, the business may face a longer period of uncertainty just when continuity planning is most important.

This does not mean every delayed claim reflects poor insurer conduct. Complex claims can involve external doctors, employers, accountants, superannuation trustees or legal representatives, and those parties may influence timing. However, the inquiry reinforces a practical point: insurers still need disciplined processes for identifying required information, coordinating requests and keeping claimants informed about what is outstanding and why.

The review also sits alongside earlier concerns about claims service, including a prior claims delay sanction involving serious breaches of the Life Insurance Code. Together, these developments suggest that claims handling will remain a central measure of insurer performance, not a back-office issue.

For business owners, the general lesson is to keep policy documents, role descriptions, financial records and governance authorities organised before a claim arises. Cover levels, ownership, beneficiary arrangements and evidence requirements should also be reviewed periodically, particularly when a key person’s duties, business debt or revenue contribution changes.