Source: Money Management: 01 Jul 2012
The 10 biggest life insurers paid out just under $4 billion in claims in 2011 - up 11.4 per cent from 2010, according to research conducted by The Risk Store.
The amount of money paid out in claims has increased by 96 per cent since 2006, said Risk Store managing director Peter Wincott.
"The industry does pay claims, contrary to the current affair programs we often see where the bad insurer doesn't pay out," Wincott said.
"Four billion dollars is a significant amount of money, and if it wasn't paid by the life insurance industry it would have to be found from somewhere - either from the community or social services," he said.
Only around 2.4 per cent of claims are knocked back by insurers, Wincott added.
"That's due to three things: non-disclosure, non-payment of premiums (they've let the policies lapse) or fraud. It's a tiny amount. The majority of claims are genuine claims and they get paid," he said.
Wincott said his members tend to print off the key findings of the report in colour and laminate them, as a tool to use with clients who are "recalcitrant cynics" when it comes to the life insurance industry.
"[Advisers] can just pull this out Ö and say 'actually, this is from an independent source, this is what was paid last year'," he said.
The number of advisers who don't know how much is paid out by the life insurance industry each year is "amazing", Wincott said.
"It's as much an education tool for our members as it is a marketing tool," he added.
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