News eDaily19 Apr 2017

Australia:Super sector moves closer to life insurance code

19 Apr 2017

The Insurance in Superannuation Working Group (ISWG), an industry panel, has moved closer to developing a Life Insurance Code of Practice for superannuation trustees, with the release earlier this month of a second discussion paper titled "Claims Handling".

ISWG Chairman Jim Minto said that while the vast majority of life insurance claims were handled well, there was scope for improvement to help members when claiming. “We want claiming life insurance in superannuation to be a ‘best practice’ experience at what is a difficult time for a member or their dependants. The process needs to be member-centric, as well as simple and consistent across the industry,” Mr Minto said.

The ISWG is comprised of Australia’s superannuation bodies, the Australian Institute of Superannuation Trustees, the Association of Superannuation Funds of Australia, the Financial Services Council, Industry Funds Forum and Industry Super Australia. The group also includes representative life insurers, superannuation funds and consumer advocates.

The new discussion paper examines existing practices and issues associated with insurance claims handling and outlines some ambitious changes in timeframes developed by superannuation and life industry representatives to improve the member experience.

In reference to suitable timeframes, the ISWG proposed the issue of claim forms at the request of claimants be made within five business days; the fund’s independent review of the insurer’s decision should be completed within seven business days of the insurer confirming a payment will be made and 15 days in the instance of a denial; and payment of a claim once approved should be made within five business days.

The discussion paper also said that delays in processing claims and resolution of complaints taken to the Superannuation Complaints Tribunal (SCT) may be leading fund members to engage lawyers despite the cost to themselves.

The discussion paper quoted figures from the recent interim report of the review into the financial system external dispute resolution and complaints framework which showed that in 2015-16, the average time to resolve a complaint from lodgement to determination through the SCT was 796 days, a 25% increase from 2010-2011.

The ISWG released its first discussion paper last month titled “Account balance erosion due to insurance premiums”, which examines how to address the issue of members paying for cover they don’t need through having multiple super accounts. More discussion papers are set to be released later. Based on feedback on the papers, an enforceable Code of Practice and Good Practice Guidance for Trustees is expected to be published by the ISWG later this year.

 


 

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