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23 months 'too long' to decide on claim: AFCA

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OnePath did not comply with the Life Insurance Code of Practice when it took 23 months – nearly double the time provided by the code – to decide on a claim for a total and permanent disability (TPD) benefit.

The Australian Financial Complaints Authority (AFCA) ordered the insurer to pay $5000 in non-financial loss to the TPD policyholder, ruling it had taken too long to make a final decision.

AFCA says OnePath’s overall management of the claim “predominantly” contributed to the delay, causing the policyholder an unusual degree of stress and inconvenience.

“This is an unreasonable amount of time and inconsistent with the requirements of the Life Insurance Code of Practice,” the AFCA ruling said.

“I accept the time taken to resolve this claim (23 months) is unusual and has interfered with the complainant’s peace of mind.”

The Life Insurance Code of Practice states that for non-income related claims such as TPD, the insurer will make its decision within six months unless unexpected circumstances apply, when the insurer will make its decision within 12 months.

OnePath says it was investigating possible non-disclosure and or misrepresentation but AFCA says the insurer had ample time to manage and review the claim, which the policyholder lodged in June 2019.

In this case, OnePath should have finalised its claim decision by June 26 last year, AFCA said.

The insured submitted the claim after suffering tears in his left shoulder rotator cuff and left knee meniscus, which left him unable to return to work.

OnePath finally rejected his claim in July this year.

AFCA says its ruling only deals with the allegation of claims delay since the insurer’s case on non-disclosure is not part of the complaint.

Click here for more from the ruling.