As financial services is dragged screaming towards the fee-for-service model, there’s been a lot of malice coming to the surface, not least that directed towards the industry funds, who are already largely there. That ill-feeling might manifest itself in a cranky response to APRA’s whole-of-fund super performance statistics, as useless as they admittedly are. Maybe it comes out less publicly, for instance by feeding an Australian journalist an erroneous hatchet-job about the Conference of Major Super Funds, confident in the knowledge they won’t bother ringing to check the facts.
(We know who you are, by the way.) The industry funds give as good as they get, of course, whether it be through the AIST or other channels. But amid the crossfire, an emerging area of universal agreement seems to be that group insurance through industry funds is pretty damned good value. Whether or not advisers would come out and say so, there is anecdotal evidence they are parking at least a little of their clients’ nest eggs into industry funds, for no other reason than to exploit the generous accessibility and pricing of the group insurance offer. Certainly I’ve spoken to accountants who happily admit this is a key part of the process they go through in setting up an SMSF for someone.
The growing popularity does not mean there isn’t room for improvement in the industry fund group insurance space, as members of the Industry Fund Forum (IFF) readily admit in our latest roundtable (starting page 28). It takes funds an average 160 days to finalise total permanent disablement claims, for example, and that’s on top of the standard six-month waiting period. Claims related to mental illness have been particularly problematic in a group insurance context, and the roundtable makes clear that too many of these have been ending up in the Super Complaints Tribunal. The IFF’s ‘Superfriend’ initiative is doing all it can to help, by promoting understanding of mental health issues among funds, their employers and members.
It is also developing a code of practice for mental illness claims processing and underwriting, which extends the IFSA code to which insurers are already signatories, by acknowledging member administrators as a big part of the picture. The code will enshrine practices like having a single case manager and point of contact for claimants – the roundtable dramatically brings out the problems that can arise when someone with a psychiatric disorder is given the run-around, or is not given clear information as to the status of their claim. Superfriend is also working on standardised claim fact sheets, and a ‘bereavement kit’ to assist communication with families involved in death claims. Keeping insurance claims out of the SCT is a great way of improving the ‘efficiency’ that Jeremy Cooper keeps talking about, particularly given that fees for admin and management will be the focus of industry battles once the commission debate plays out.