TAL chief executive, group life and retirement, Jenny Oliver has disputed the characterisation of a provision in its insurance arrangements with Cbus as providing an incentive for the fund to deny or delay insurance claims.
And MUFG Pension & Market Services (formerly Link) chief executive officer Vivek Bhatia has declined to say whether he agrees with Cbus chair Wayne Swan’s assertion that claims processing delays were its fault.
A Federal Court action brought by ASIC in November alleges that from September 2022 to November 2024, United Super, as trustee of the Cbus fund, failed to act efficiently, honestly and fairly in the handling of claims for death benefits and TPD insurance.
It alleges that more than 6000 Cbus members and claimants had their payments delayed by more than 12 months.
Responding to questions from chair of the Senate Economics References Committee, Senator Andrew Bragg, about the possibility of a bonus payment to Cbus, Oliver said the arrangement in question is known as a premium adjustment model.
“I wouldn’t characterise it as a bonus payment,” Oliver said.
“The objective of a premium adjustment model is primarily to ensure that members of superannuation funds pay efficient and fair premiums.”
Oliver said the model recognises that premiums are initially set with reference to expected claims, but there is “uncertainty in determining what the ultimate claims experience will be”.
“A premium adjustment model works to align the ultimate premium to the actual claims, rather than the expected claims, and it does that by reviewing the claims that are received against the initial expectations,” she said.
Bragg referenced a statement on the Cbus website that the fund has “an arrangement with the insurer under which we may receive a payment from the insurer in years where the level of claims compared to premiums is low”.
“That would suggest to me an incentive to pay fewer claims, or to maybe drag out claims,” Bragg said.
“Most people would look at that and say, ‘Well, that’s an incentive for a fund like Cbus to not pay death claims and to gain a financial benefit, which you can then pass on to others, including perhaps shareholders like the CFMEU.”
Oliver said she did not believe the adjustment model “provides an incentive to deny claims”.
“I can confirm that every claims consultant within our organisation, and when I was the chief claims officer, anyone who has delegation to make a decision does not have any incentives or KPIs associated with the amount of claims they decline,” Oliver said.
“Rather, they’re incentivised on the quality of the decision that they make.”
Oliver noted that Cbus’s annual report provides “disclosures around these arrangements as they relate to movements in their insurance reserves”.
“Looks pretty murky to me,” Bragg responded.
Bhatia declined to say whether he believed the company’s superannuation administration arm, Link, was responsible for delays in processing Cbus members’ insurance claims.
Bragg told the inquiry that Cbus chair Wayne Swan had publicly sheeted home blame for the delays to Link. Swan has previously been asked to explain discrepancies between what he told the inquiry and information contained in an independent report commissioned by Cbus from Deloitte as part of enforcement action brought by APRA focused on governance failures at the fund.
Bhatia responded that he respected Swan’s point of view, and that “we have strong relationships with and long tenure relationships with …20 superannuation funds where we do provide end-to-end administration services, in most cases, lasting for more than 10 years”.
“And yes, you know, time and again, as there are in large operational areas, there are challenges, but we have always worked together to ensure that we can remedy them,” Bhatia said.
He cited an ongoing ASIC investigation and court action as reasons for declining to answer, but Bragg said “generally, we would expect a witness to answer a question, unless you have some particular reason”.
“So again, my question is, what do you make of the statements that you are to blame for this very material problem?” he said.
“These are matters which may be subject to an ASIC inquiry, but they’re also dealing with legislation that Parliament has passed to enact this compulsory saving scheme and to embed default insurance in it. So it’s okay for a chair of a fund to blame an administrator for something, then it’s a very big deal.”
Bragg asked Bhatia if MUFG had held any meetings with Cbus ahead of his appearance at the inquiry, and Bhatia said it had not.
