The Australian Prudential Regulation Authority (APRA) wants life insurers and superannuation fund trustees to work together on claims management.

In May the regulator requested information on claims handling from insurers, and it has now raised issues with their processes.

It wants insurers to review insurance benefit design and definitions, with a stronger focus on delivering appropriate benefits at a reasonable cost.

APRA calls for better sharing of information between insurers and super trustees, including claims data and trends.

And it wants insurers, trustees and reinsurers to work together on better outcomes for claimants, plus improved explanations of insurers’ claims philosophies.

In a letter to insurers APRA Executive Member Geoff Summerhayes says the regulator is monitoring the progress of insurer reviews on claims management.

“Reviews of claims processes should focus on how valid claims can be paid as quickly as possible, while being vigilant to identify instances where claims processes result in inappropriate outcomes for claimants and rectify them,” he says.

The letter says APRA is working with the Australian Securities and Investments Commission (ASIC) on claims handling. APRA will follow up issues raised in ASIC’s report on the life insurance industry, released last week, and insurers’ responses.

“Where APRA is not satisfied with progress, it may consider taking supervisory actions such as requiring formal board-approved remediation plans or regular reporting to APRA,” Mr Summerhayes says.

“APRA is not seeking any further formal response from insurers at this stage.”

In a letter to super fund trustees, APRA Deputy Chairman Helen Rowell says the regulator will look closely at group life contracts.

“Group insurance arrangements, including claims oversight and governance practices, remain an area of heightened focus for APRA,” she says.

“We expect industry practices to continue to evolve and improve.”

The letter notes some trustees are working with insurers to improve benefit design and claims management.

“APRA is closely monitoring the progress of these activities, along with the governance processes around these changes, and expects key risks to be recognised and actively addressed,” the letter says. “Reviews of claims processes should focus on how valid claims can be paid as quickly as possible.”