Complex super claims process force lawyer involvement
Members who need to claim on their life insurance through superannuation may choose to engage a legal adviser or lawyer to aid in the notification and lodgement of the claim if they anticipate delays and complexities in the claims process despite them incurring sizeable legal fees, according to a working group.
The Insurance in Superannuation Working Group (ISWG) has released a discussion paper as another step towards developing a Life Insurance Code of Practice for super trustees, which said the processing delays being faced by the Superannuation Complaints Tribunal (SCT) could be leading members claiming towards appointing a lawyer and litigation as a faster way to advance a claim than the SCT.
The discussion paper quoted figures from the recent interim report of the review into the financial system external dispute resolution and complaints framework (the Ramsay Review) 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 per cent increase from 2010 to 2011.
“If the claims processes operated by the superannuation fund and insurer are considered by them to be cumbersome, or if they do not have confidence that they will be treated fairly by the fund or the insurer, this may drive them to engage the services of a law firm,” the discussion paper said.
The working group, which includes the Australian Institute of Superannuation Trustees (AIST), the Association of Superannuation Funds of Australia (ASFA), the Financial Services Council (FSC), Industry Funds Forum (IFF), and Industry Super Australia (ISA), acknowledged that lawyers had a role to play in relation to controversial life insurance claims through superannuation.
However, the group said involving a lawyer early in the claim before the insurer has handed down a decision on the claim and before the super fund has reviewed the insurer’s decision “risks the unnecessary depletion of claims benefits that may well have been paid without the involvement of a lawyer”.
The discussion paper also proposed timeframes for key actions for super funds to follow in relation to claims from the first contact with the claimant through to the conclusion of the claim and payment of benefits if applicable.
This included issuing of claim forms at the request of the claimant within five business days of receiving it, an initial eligibility assessment of the claim upon receipt of a correctly completed submission within 10 business days of receiving a completed claim submission, and payment of the claim once a claim amount has been approved within five business days of the super fund confirming that a claim can be paid and the claimant has provided all necessary payment instructions.
“The superannuation industry intends to work with various legal representative bodies in order to develop protocols for the engagement of legal practitioners in claims for life insurance benefits through superannuation,” the discussion paper said.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
