Prepare for ‘brave new world’ of insurance

Eva Scheerlinck

By

03/09/2018

AIST CEO Eva Scheerlinck (Photo: Supplied)AIST CEO Eva Scheerlinck (Photo: Supplied)

It’s no secret that insurance in super is heading for a major overhaul. Numerous inquiries and reports over the last year or so have highlighted important issues that the industry is working to address.

The release of a report on insurance in super by ASIC is imminent and will doubtless shed further light on issues such as the time it takes to resolve complaints.

For example, ASIC has long expressed disappointment with the fact that the average time taken to resolve insurance complaints is well over the mandated 90-day limit.

By their nature, insurance complaints are complex. Indeed, many trustee directors regard decisions about insurance as one of the most challenging aspects of their role, particularly given the potential life-changing impact these decisions can have on members or their beneficiaries.

Compounding this is the fact that resolving insurance complaints is not a one-step process. It requires close policy analysis, an understanding of a member’s circumstances, potentially notifying beneficiaries and calculating entitlements, and a range of other considerations.

Clearly, the complaints experience for many members is not good enough, and all funds must work harder to
get this process right.

Industry efforts

The good news is that several industry initiatives to improve both insurance offerings and the handling of complaints are well under way.

The newly developed Insurance in Superannuation Voluntary Code of Practice contains provisions to enhance member protections, lift standards and support better complaints handling.

Under the code, the maximum time for resolving complaints will drop from 90 days to 45. Australian Institute of Superannuation Trustees (AIST) members have overwhelmingly supported this code, and we’ve already seen some of our member funds make significant changes to their insurance offerings where it was felt they would clearly benefit members.

The arrival of the Australian Financial Complaints Authority (AFCA) will also have a real impact. With this dispute resolution body comes a new process that differs from that of the Superannuation Complaints Tribunal.

It is vitally important for funds to understand the changes, and how they will affect their members’ journey through the claims process and likely outcomes.

Internal, external

AFCA is settling its rules and processes around external dispute resolution and will be releasing more information soon. Trustees must be ready to wrap their heads around the new framework and develop policies and processes to ensure that complaints are resolved satisfactorily.

There will also be changes to internal dispute resolution. Once AFCA commences operations, in November, ASIC will consult on and release new internal dispute resolution requirements for trustees.

Given it is the trustees who are ultimately responsible for deciding whether a beneficiary receives a payment in response to insurance claims, all super fund boards must be fully across the new complaints framework and ready to develop new policies and processes to ensure that complaints are resolved satisfactorily.

This is a brave new world for all parties, AFCA included. It is an opportunity for everybody to work together to improve insurance offerings and ensure all complaints about insurance are handled efficiency and effectively.

CEO Eva Scheerlink will open the Australian Institute of Superannuation Trustees Super Investment Conference, to be held in Cairns, September 5-7.

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