Unbundling Australia’s Group Insurance Claims Statistics

Shorter waiting periods and speed to claim are highly correlated to a person’s capacity to return to work faster, should they lodge a claim against their income protection policy as part of their Group risk insurance.

New statistical analysis by Rice Warner has revealed this and other key insights based on a study of 43 percent of all Australian Group risk insurance.

The study has given greater clarity to Australian risk insurers, Superannuation Funds and their insured members, in an area that has traditionally remained relatively under-researched and opaque.

The Rice Warner Group Insurance 2010 to 2013 Industry Tables, were released this week.  The research combines data from 16 large Superannuation Funds, creating benchmark industry statistics for probabilities of claim and for Income Protection probabilities of ceasing to claim.

Group Insurance claims are a complex area for industry stakeholders hampered by an historical lack of clear analysis.  While the Rice Warner statistics go much further to resolving the information gap, the Group market would benefit from a continuation of this valuable research into the future.  For example, the statistics show long-term income protection claimants who notify within the first six months are more than 40 percent more likely to return to work within a year, compared to claimants reporting their disability in the second six months.

For the time being, however, the Rice Warner group statistics (or tables, in actuary-speak) have enabled the Australian Group Life industry access to current and credible data for pricing.  This helps to lift us to global best practice.  This would enable more confident pricing decisions to be made for the benefit of the whole industry.

Other key insights from the Rice Warner Report:

• Occupations affect claim reporting delays: the delay for hazardous occupations is 60 percent higher than that for professional occupations.
• Waiting period has a significant impact on Income Protection return to work statistics.  There is a 68 percent higher chance that a claimant on a 30 day waiting period will not be on claim within 12 months, compared to a claimant on a 90 day waiting period.
• For TPD claims, musculoskeletal claims represent approximately a third of all claims for all members (excluding younger ages, where accidents/poisons/crimes are the highest), and are at least twice as likely to be the cause of claim than from any other claim type.  Mental/stress claims peak at over 20 percent of all claims for members aged 30 to 39, the highest proportion for any age band.
• Mental/stress claims feature as the most common Income Protection claim cause for middle aged people, and musculoskeletal claims are prominent among members over age 50.

Jenni Baxter, Head of Consulting and Research