The Australian Securities and Investments Commission is working with the Australian Prudential Regulation Authority to develop a new public reporting regime for life insurance companies, after conducting a review which found "significant shortcoming" in the industry.In a bid to shed light on industry practices, the new reporting regime will require insurers to report on claims paid, claims denied, claims handling timeframes and details of disputes.ASIC released a review of life insurance industry claims handling yesterday, which revealed "issues of concern" in relation to declined claim rates for particular types of products, notably total and permanent disability and trauma. Data will be made available on an industry and individual insurer basis.ASIC found that some insurers had high rates of denied claims. And it found that the industry needed to address the way it applied the principle of "fairness". ASIC said: "An issue arises when a policy holder's reasonable expectations about policy coverage do not align with the technical wording in the policy."A key challenge for the sector is how to deal with that small number of claims that may not technically be covered under the 'fine print', but under any reasonable consumer or community expectation should be paid. We found that ex-gratia payments were inconsistently applied across the sector."In addition to the introduction of a new reporting regime, ASIC has recommended that the Government amend the Corporations Act to provide specific coverage of claims handling.ASIC deputy chair Peter Kell said such a change would allow the regulator to look more closely at claims handling standards, particularly as they relate to fairness.Kell said the issue of fairness should also be a more prominent part of the mandates of the ombudsman services. ASIC has recommended that the consumer dispute resolution framework for claims handling be strengthened.Kell said the new Life Insurance Code of Practice was "an important step forward" but needed to be strengthened in a number of areas.Some of those areas include policy definitions, advertising standards, claims timeframes and the management of conflicts of interest when setting incentives and performance measurement for claims handling.ASIC will undertake a number of follow-up reviews, focusing on insurers with high decline and dispute rates.The review found that where a decision has been made, 90 per cent of claims are paid in the first instance. For death claims, where a decision has been made 96 per cent of claims are paid."Although the considerable majority of claims are paid, we are concerned that in some cases claims are being declined on technical and contractual grounds that are not in accordance with the spirit or intent of the policy," it said.The product that caused most concern was TPD. The denied claim rate for the product was 16 per cent, compared with four per cent for life cover. One insurer has a denied claim rate of 37 per cent for TPD policies.