Dispute resolution body Australian Financial Complaints Authority (AFCA) believes trustees are getting better at addressing insurance claims compared to a year ago, with lead superannuation ombudsman Heather Gray saying that funds are “working hard” to increase resources and improve efficiency in responding to member queries.
However, the number of complaints about delays in claims handling is still staggering, as Gray says the category accounts for more than a quarter of all super-related complaints AFCA receives.
With a Senate inquiry into the retirement system also in train, funds need to go beyond “working hard” and actually come up with ways to better meet community expectations. Chair of the inquiry, Coalition senator Andrew Brag, has made it clear that there need to be some “heads on spikes” to put super funds’ claims-handling in order.
Ahead of her appearance at the newly rebranded Investment Magazine Insurance in Super Summit, Gray urged funds to address some persistent pain points in handling claims. Resourcing is the biggest one.
“It’s just a time in the industry where there’s a lot of claims, there’s a lot going on with insurance,” she says.
“It’s not always easy to have those resourcing levels to be at the point that trustees and insurers would like to see.”
A “checklist-driven” approach is also not sufficient to deal with the nuance in handling different claims, Gray says.
“People might be asked for documents which would mostly be relevant, but in their particular case are not, or where something’s not being followed up,” she says.
“Because again, maybe it sits a little bit outside that standard checklist, so it’s quite late in the phase when something’s asked for, and that’s caused a delay.”
According to the AFCA Datacube, there were 840 complaints related to superannuation group life insurance and 271 related to death benefits distribution in the six months to 31 December 2023.
But Gray says AFCA has been seeing quite a few complaints related to income protection, where either members’ claims have been declined or the payments failed to show up. But quite often, those complaints can be traced back to poor disclosure or communications, she says.
“That fund member [with the complaint] has got their income protection insurance, but they don’t really appreciate that, for example, there might be an offset if they are receiving workers compensation payments or are receiving money from another source,” she said.
“Or if they’re self-employed, they might not really understand how the insurer is going to calculate their pre-disability income.
“So when expectations aren’t met, and there’s that mismatch, that can be the beginning of a complaint that can be quite difficult for people to address.”
With that said, Gray acknowledged that AFCA does tend to get the benefit of hindsight, whereas it might be more difficult for funds to see things clearly “in the thick of handling a claim in real time”. Gray says she is looking forward to learning about the side of the story that leading super funds and insurers in the room are seeing.
“They may or may not necessarily be seeing exactly what I’m saying, because I only see when something’s happened, which hasn’t been able to be resolved and has ended up in a complaint to AFCA,” she says.
“I would be interested to hear ideas from people in the room about how community expectations around the way that their claims for insured benefits will be handled will be met.”
The 2024 Insurance in Super Summit will take place on 23 July at InterContinental Sydney Double Bay.
Senator Bragg and Minister for Financial Services Stephen Jones feature as speakers; and a leaders panel will canvass the views and opinions of Zurich chair Geoff Summerhayes, REST chief executive Vicki Doyle, Aware chief executive Dianne Stewart, TAL group life and retirement chief executive Jenny Oliver, and CALI chief executive Christine Cupitt.
