The following people met recently to discuss the sustainability of insurance. Jeff Humphreys, principal, CHR Consulting; Linda Winterbottom, senior rehabilitation specialist, CommInsure; Bernard O’Connor, company secretary, NGS; Helen Hewett, executive officer, Industry Funds Forum; Colin Cassidy national insurance manager, HOSTPLUS; Frank Crapis, head of industry funds, Comminsure; Margo Lydon, chief executive, SuperFriend and Russell Mason, partner, Deloitte.
There is a growing belief that TPD claims should be issued as income protection claims. The offer of rehabilitation services with income protection and the chance of re-enter the workforce would ultimately be best for a member’s mental and physical well-being. These services were also favoured as a protective factor against suicide and mental illness.
Russell Mason, lead national superannuation partner at Deloitte, highlighted the finality of TPD as offering no way back for members.
“I have had employers say to me, ‘Actually I do not want to tell X about TPD because it is almost telling them that they are finished.’ And I have seen this with cancer cases,” he said. “Income protection is not saying: ‘You are finished’. It is saying: ‘At this point in time you are temporarily disabled, but we hope you get better.’”
In this context, he speculated on whether TPD might be phased out completely except for extreme cases.
The debate also covered whether it was preferable for members to receive an income stream rather than a lump sum, not least because members would often managed lump sums poorly.
Linda Winterbottom, senior rehabilitation specialist at CommInsure, thought part of the battle was getting onside with doctors who might have built up an adversarial relationship with insurers from dealings with workers’ compensation claims.
“If we can get to those doctors, and say, ‘Look, we are here to support you and we are here to support the member. This is what we can provide. So when you think it is the right time, we can bring this in.’ Half the time they go, ‘I was not aware of that,’” she said.
She added WorkSafe was realising the health benefits of rehabilitation from research carried out by the Australasian Faculty of Occupational and Environmental Medicine.
“They have been doing postal packs out to GPs about how work is good for people and you should be encouraging that.”
Margo Lydon, chief executive of SuperFriend, said employers also had a key role in this process and the work being done by Dame Carol Black in the UK around fit for work certificates and clinics was setting standards in getting people back to work as soon as they possibly could, even if they were not 100 per cent fit.
SuperFriend is promoting this to employers as a way to help with profitability, productivity, absenteeism and presenteeism.
“A lot of employers do not necessarily know the cost to their business of somebody coming out of the workforce, and there are direct costs which sometimes they will be measuring,” she said. “But there is a whole raft of indirect costs, such as replacement costs, even someone transitioning in to cover that person’s workload etc.”
An employer’s engagement with a member during the time they are off work and coming back into work is critical.
“If somebody leaves the workforce for a period of time bereaved and is not well supported coming back into the workforce, research says that they are most likely to actually leave that place of employment,” she said.
A good claims team
One point raised forcefully by Colin Cassidy, national insurance manager at HOSTPLUS, was that standards of recruiting, training and retaining claims staff was not as high as it should be.
“I do not believe, as an outsider looking in, that the quality of the claim staff that does the assessments for these millions of people are what it was five, 10, 15 years ago,” he said.
He thought the cause was insurance companies tightening their budgets on training and that where once staff had 4-5 year training courses, now it might only be as short as six months.
“Then they say, ‘You are now a senior claims assessor. Assess claims. Here are 100 files. Go for it.’,” he said.
Some of the attention to detail he thought had been lost was the diligence to investigate claims. He described how as an income protection claims assessor in the 1970s, one of his jobs was to visit claimants in their homes and talk to them. His impression was the drive to cut costs and a high turnover of staff in claims departments had led to a greater laxity in checking claims.
He thought in some cases claims were being paid at a rate of between 96-98 per cent. “You cannot make a profit if you are paying so much, but no one complains,” he said.
Mason concurred that in 1980s insurance companies started delivering claim forms rather than making home visits. He added in the 1990s training had dropped off, but it was coming back because of losses coming through for insurers.
Winterbottom took issue with several of Cassidy’s points. Most forcefully on the training currently in place at CommInsure.
“The skill level is actually getting higher. I started in the industry in 2001, and a senior claims assessor back then was somebody with four plus or five plus years of experience who had been through it all, and it is harder now.”
She cited the new and better practices of dealing with ‘suicide phone calls’ as one example of this. This extra training was confirmed by Lydon, who cited the suite of training programmes SuperFriend was offering on mental health, two modules of which are aimed directly at the insurers, the claims staff and assessors.
However, Winterbottom agreed that staff turnover was too high.
“There is a massive supply and demand problem out there with claims staff, and exactly what you were saying is happening. Somebody goes, ‘I will go to this company because they will give me an extra $10,000 more.’”