Sustainable group insurance is a scale game that needs significant resources, Richard Weatherhead, head of group insurance at AustralianSuper, told delegates at the Group Insurance Summit.
He revealed how in the fund’s bid to weather a storm of rising claims, lawyer intervention in such claims and higher premiums it had raised the numbers employed in its claims team to 146, while there was an ongoing to need to boost its analytics capability.
It has also rethought the objectives of its insurance program, which has led to lower default cover for TPD, a strengthened active employment test and cover more closely aligned to needs.
In May, AustralianSuper introduced what Weatherhead described as an advanced rehabilitation service that was optional for TPD claimants, but was so far being used by 55 per cent.
He justified the extra cost of a better claimant experience as in the long term interests of the member, partly as lower premiums would cut the risk of retirement benefits being eroded.
AustralianSuper pays premiums of $600m to its insurer TAL – a tripling in price compared to four years ago.
The claimant experience is a “key moment of truth for members” and is absolutely paramount from a trustees’ perspective, said Weatherhead.
“There is a recognition that we can enhance the claims process by doing things such as having more people answering telephones, more people following up quickly, more people spending more time with the member, rather than closing out the conversation early,” he said, referring to success being a ‘scale game’.
“And all of this costs, but philosophically the fund has decided it is something we will pay for.”
Coupled with this change in strategy had been the realisation that a closer relationship is needed between a fund and its insurer, particularly in developing technology.
“We look at what services we want the insurer to provide and we budget [for that]. That’s a service provider relationship; we want to pay a bit more for the service.”