The Australian Financial Complaints Authority (AFCA) has ordered AMP Life to compensate a claimant $5000, the maximum allowed under its rules, for taking “far too long” to assess an income protection claim.

AFCA says the claimant, who worked as a locum, had fully co-operated with the insurer since lodging his claim on June 29 2017, providing AMP Life with a “huge volume of material” such as medical records, invoices and tax returns as requested.

That AMP Life has not yet decided whether to accept or deny the claim, as of April 30 this year, has caused the claimant “significant distress” and he is entitled to the $5000 non-financial loss compensation.

“The insurer has had 1036 days or 34 months to make a decision on the claim,” AFCA says in its ruling of the dispute. “So, as at today’s date, the insurer has taken 17 times longer than an ordinary income protection claim should take, and nearly three times as long as a claim with ‘exceptional circumstances’ should take.”

If exceptional circumstances apply, as are allowed under the Life Insurance Code of Practice, insurers have up to a year to make decisions on income protection claims, AFAC says. Otherwise decisions must be made within two months.

AFCA says it could find no reasons to suggest exceptional circumstances should apply in this case. The mediator also did not accept the insurer’s submission that it needed more information from the claimant’s employers.

Furthermore, evidence provided to AFCA showed AMP Life had indicated in 2018 to the claimant that a decision was imminent.

“The insurer knew, right at the very start of the claim, that the complainant had worked as a locum,” AFXA said. “Many of its requests for information over the past year or so, and its current investigations, are to do with that work.

“The insurer has not explained why it could not have made these more recent enquiries much earlier in the claims process.”

AFCA also ordered AMP Life to decide whether to pay the claim benefit and comprehensively explain its decision and benefit calculations to the complainant.

Click here for the determination.