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DII claims paid ratio highest in two out of four sales channels

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Disability income insurance (DII) policies topped the claims paid ratio in two out of the four channels where the products are distributed, new data from the Australian Prudential Regulation Authority (APRA) shows.

Group super and group ordinary are the only sales intermediaries where DII did not have the highest claims paid ratio for the rolling 12-month period to June 30. Total and permanent disability (TPD) leads the payout for covers sold through group super with a ratio of 95% and trauma in group ordinary with 100%.

For individual advised and individual non-advised channels, DII covers reported the highest claims paid ratio of 84% and 121% respectively.

DII products sold through group super and group ordinary have the second highest claims paid ratios, at 87% and 86% respectively.

“With the introduction of various sustainability measures, APRA is working with the industry to move the product to a sustainable state and thereby deliver better outcomes for policyholders,” the regulator said.

APRA has resumed its work requiring DII providers to address flaws in design and pricing that has caused the product line to lose $3.4 billion in the last five years.

DII providers who fail to take adequate action will face additional upfront capital penalties.

The APRA data is based on industry and entity-level claims and disputes outcomes for 20 life insurers writing direct business.

The admittance rate across all cover types and distribution channels was 94%.

DII products sold through individual advised channel has a claims admittance rate of 94%, individual non-advised 85%, group super 96% and group ordinary 95%.

About 81% of DII claims received across all four distribution channels were finalised and the admittance rate was 95%. Around 5% of finalised claims were declined and 7% were withdrawn.

For more from the report, click here.