Ian Fryer, general manager of Chant West

Superannuation trustees have no choice but to upgrade their group insurance claims processes and technology if they want to avoid falling short of the government and regulator’s expectations, says research house Chant West.

The researcher’s general manager, Ian Fryer, estimates about half of superannuation funds still subject members to paper-based claims forms and manual application processes, while the remaining half have moved their processes online. The shortfall comes despite the vast majority of insurers, in Fryer’s assessment, offering online portal functionality on an opt-in basis to trustee clients.

“The hesitancy in the past [from funds] has been needing to do all the work to link it in, when there’s a whole bunch of other stuff to get to that was really important,” says Fryer, an actuary and veteran super industry analyst who will speak at the Investment Magazine Group Insurance Dialogue on 18 July.

“But my point would be it is probably about time to get to it. The government and regulator are saying member experience is critical, and the most critical time for a member is claim time. So, we need to do a good job there. When the government and ASIC say you need to up your game, you can’t ignore it.”

The corporate regulator last year undertook a review of life insurance arrangements across a sample of 15 super trustees. It found many had improved the design of their insurance offers and claims processes, but had “not made sufficient effort in all areas”.

“Trustees … need to ensure they have robust systems, processes and controls to effectively administer their insurance arrangements,” said ASIC Commissioner Danielle Press, who will also address the Dialogue this month.

“Trustees that fail to do this risk undermining any improvements they are trying to make for their members’ benefit.”

Separately, Minister for Financial Services Stephen Jones has on multiple occasions laid out the Albanese government’s expectation that funds prioritise member experience and make improvements where necessary. Jones will also participate in the Dialogue.

A legislated purpose of super

The government is also working on its plan to legislate a purpose for the superannuation system, which invariably has implications for group insurance, Fryer says.

“I don’t think we need to put in a purpose of super that is explicitly about insurance,” he tells Investment Magazine.

“But I think what we can say is that if super is about providing income when you can’t work again, then clearly you can’t ignore the fact that for some people that happens early. So, it’s natural that you include some sort of understanding of insurance as really important to that income in retirement piece. It has been an integral part of super – not the most important part, but important. I can’t see that changing.”

Best practice in claims handling would be for trustees, via their insurance providers, to offer not only a digital portal but an element of automation to members, whereby it is the trustee or insurer that is pre-filling claim forms and simply seeking authorisation from the member. By contrast, some enduring manual processes still require the individual member to fill out lengthy and legalistic paperwork, including privately sourcing evidence from relevant medical experts.

Improving these systems is in trustees’ immediate interests, Fryer says, not just because of the regulatory expectation or even moral imperative to better service the consumer. There is also a commercial motivation for trustees.

“There’s been a couple of providers who have introduced this and the duration period of the claim – how long it takes to sort out the claim – has been a fraction of what it was,” he says.

“So it’s much better for them because it’s a commercial efficiency, but it’s also clearly a benefit to members. Online tele-claims forms are lightyears ahead of paper forms.”

For trustees looking to upgrade their processes, the first step is to check what their insurer already offers. “t’s not a matter of ‘it doesn’t exist’. It does exist,” he says. “It’s just about building the pipes.”

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