An insurer has been ordered to compensate more than 900 policyholders after it failed to meet claims handling time frames under the Life Insurance Code of Practice.

The Life Code Compliance Committee says the unnamed insurer reported 3580 breaches from November 2022 to August last year affecting income protection and total permanent disability policyholders from a superannuation fund.

The breaches occurred after the insurer and fund agreed to move claims handling from a third party to the insurer.

During the transition, the third party lost a lost a significant number of staff, which compromised its capacity to handle claims within the code’s required time frames, according to the committee’s determination.

The committee says its investigation confirmed the insurer breached several claims handling provisions in the code. These included the requirement to tell customers about the claims process within 10 business days; giving customers an update on the progress of their claims every 20 working days; and telling customers in advance that their income protection claim payments were ending.

“Insurers must ensure their change management plans support sufficient resources to meet service standards and time frames,” the determination said. “Effective risk mitigation strategies will also help address potential issues and safeguard against transition-related disruptions and customer detriment.”

The insurer took over claims handling on July 1 last year and has established new teams and provided training on code obligations and system use.

“The insurer enhanced its oversight of claims handling, with increased case conferencing, weekly performance tracking and monthly governance forums,” the determination said. “As a result, rates of compliance with time frame obligations improved and stabilised from December [last year].”

Click here for the determination.