Financial advisers alongside lawyers have been blamed, in part, for the rash of claims which have placed serious pressure on total and permanent disability products within superannuation funds.
A roundtable conducted by Money Management’s sister publication, Super Review and sponsored by TAL, pointed to the faults originating with product design and aggressive competition but also pointed to the involvement of lawyers and advisers in pushing the claims process.
Specialist lawyer, John Berrill acknowledged the role of the legal profession but said the issue was multi-faceted and that financial advisers were also bringing lots of claims on behalf of clients.
Rice Warner actuary, Geoff McRae told the roundtable that while policy terms and design were issues, the loosening off of prices had proved attractive to advisers.
He said the evidence suggested that advisers had viewed TPD insurance within superannuation as somewhere “they can bring hard to place risk”.
“They have realised that while they don’t get any commission they can have some very happy clients,” McRae said.
Berrill said however that the root cause of the problem with TPD had been the competition introduced as a result of choice of fund in 2005 which had created a feeding frenzy and a big push for market.
“What you are seeing now is the claims from who were covered during that period,” he said.
The chief executive of big insurer, TAL, Brett Clark said there was no question that super fund members and consumers had become more aware of insurance inside superannuation and that it could be helpful in difficult times, while NESS Super chief executive, Angie Mastrippolito said it was a case of product design.
“When you make the honey pot too big, the bees come running. We need to get a lot tighter in the way we design our policy terms,” she said.
