Claims to fame: handling claims to improve member experience

The first part of this series, released on 2 March 2018, focussed on superannuation funds indicating their intention to adopt the Insurance in Superannuation Voluntary Code of Practice (Voluntary Code). One key issue for funds that choose to adopt the Voluntary Code will be a review of their claims handling process as discussed below.

The Voluntary Code is underpinned by a push to improve Member experience in superannuation. One key aspect identified in APRA’s report on Member experience in Superannuation was in relation to claims handling. Many Members purchase insurance through their superannuation fund and the superannuation fund is the first touch point for those Members to commence a claim through that insurance.

The point of commencing a claim is a likely point of vulnerability for Members as there is a combination of some life event or trauma which may affect a Member’s emotional equilibrium, together with a process for bringing a claim which is often very complicated and opaque.

Accordingly, the Voluntary Code attempts to address this issue.

The Voluntary Code requires the Trustee to take a greater role in insurance claims by providing increased communications, providing clearer and more accessible information about the claims process, and advocating in respect of Member’s claims and reviewing decisions of the insurer.

In particular, a claims handling process which complies with the Voluntary Code may include the following features:

1. The Trustee should provide a Member bringing a claim with appropriate contact details of one specific primary contact who will be involved with the Member’s claim the entire way through the process.
2. The Trustee should record (and retain) all written and verbal correspondence with the Member and produce that correspondence to the Member at any point on request of the Member.
3. The Trustee should conduct an initial and timely review of each new claim to determine whether it is an eligible claim or not. If the claim is not an eligible claim the Trustee should explain why it is not eligible in writing to the Member.
4. Throughout the claims process, Trustees must ensure Members receive regular progress updates.
5. The Trustee must comply with strict timeframes for actions and responses and ongoing communication. The Trustee should also monitor the insurer’s compliance with timeframes contained in the Financial Services Council Insurer Code. If timeframes are not achievable, the Trustee should explain that to the Member in advance.
6. If the Insurer declines to pay the claim, the Trustee must conduct a review of the Insurer’s decision and ensure the Member has been provided with an explanation of the Insurer’s decision in plain language, outline the evidence supporting the view, list all the documents considered by the Insurer, and allow the Member to make further representations and submissions.
7. If releasable funds are paid to the Trustee, the Trustee must promptly release those funds to the Member.
8. If a Member’s claim is denied, the Trustee must tell the Member, in plain language, the reasons for the decision, that the Member can request copies of all documents and information relied on, and at all stages, the Trustee must tell the Member how the Member can make a complaint.

As noted above at point (5), there are very prescriptive timeframes imposed by the Voluntary Code, with the admirable intention of enhancing the member experience. However, before those timeframes are committed to, Trustees should discuss with their administrator whether those timeframes can practically be met under the current administration agreement. Going forward, Trustees who adopt the Voluntary Code must ensure that their service providers also adopt the Voluntary Code as it applies to them so that Trustees are capable of obtaining full compliance.

Please call us if you would like to go into the detail of the specified timeframes. We can advise you whether and how you may disclose parts of the Voluntary Code and timeframes with which you do or don’t comply, and we can assist with the review of an existing claims-handling policy.

If a Trustee chooses to adopt the Voluntary Code, then any non-compliance with certain aspects such as timeframes must be disclosed on an “if not, why not” basis.