CommInsure place spotlight on group

The trials and tributions of CommInsure has placed the spotlight on claims handling and the need for super funds to better explain their offerings. This is part three of a roundtable.

Mike Taylor, editor, Super Review: Onto another controversial subject. The issues around CommInsure have raised questions about group insurance and the way it works, and whether members entirely understand. I don’t think they do actually understand insurance, very few people do. Again starting with you Tom, do you think there’s a need to carry that further? 

Tom Garca, CEO, AIST: Look I think as an industry we have to get better at explaining super. I still find it amazing that you still hear stories of people, it’s a revelation that the Age Pension works with their super. I can’t believe we haven’t dispelled that. But it still seems to be the case out there. So we’ve got to get better.

Insurance is another aspect of that, of people not understanding that they’ve got insurance, the benefits of group insurance, particularly in industries where there’s no other way you’d get retail insurance, I don’t think we sell that well enough at all. 

VIEW ALL

View all

I don’t know what really happened inside CommInsure, maybe they don’t either yet, but they will find out. But you know [via] the prudential standards there is a high level of safety in the group system. You know there are mechanisms that if something is declined then it’s got to go through the processes, so it’s checking and re-checking and checking. And there will be a mistake every now and again, but I wouldn’t suspect there’s a systematic error within group life within these funds. I really wouldn’t imagine seeing it, but I’m not running a fund so I could be corrected...

Peter Brook, CEO, Pillar Administration: The trustee is letting the member down if they haven’t reviewed those policies that they had in place. Now I can understand many people walking around irrespective of superannuation, sit with insurance policies, they just don’t understand. And insurers will run by those archaic rules that they have. But here in the superannuation space, you have a professional body, a knowledgeable body that should be looking at the policy and its terms and conditions for the relevance of its members. And even with that, I’m sure most members don’t understand what they have got. But you kind of have a guardian angel...should have a guardian angel that the policy is fair, reasonable and you’ve got a trustee.  

TG: So they are out there trying to make sure that if it’s due to be paid, they want to get it paid.  

Nick Callil, head of retirement income solutions, Willis Towers Watson: It’s not a passive role, they should be proactively making sure the insurer has got all the information. The decision comes back, and if they feel it’s not right then they take it up with the insurer, they facilitate the process. So guardian angel is a good word, and whether people understand that or not, I suspect they don’t, they probably think it’s just like the retail purchase. Super fund members are in a lot better position I think, but we probably need to emphasise that more because it’s a super...sorry, insurance and super is a really big proposition. 

PB: Yeah and there’s some things that insurance and super doesn’t cover. And that needs to be pointed out just as much as what is covered.  

Paul Kessell, CEO, Kinetic Super: Yeah but also insurance and super is, well whether that’s a good thing or not, but for those low balance members, the cost of the insurance is very high, as a significant impact on their balance, more so than the admin fee. And I don’t think they understand that, because it’s compulsory. And they don’t actually know that they have insurance, if they don’t look at their statement they don’t know and they don’t know whether they can actually save or not, and how do we convey that they can. And I think also that when a member wants to make a claim they do it via the administrator, not via the insurance company, so it’s highly likely they don’t have any communication with the insurer, through the process of their claim.  

PB: I think the problem in that argument is that if you’ve got a low income earner, what’s the greatest benefit, some theoretical piece of money in the future, or that you’re covered for insurance. 

PK: Well that’s an argument that, on an individual basis where it’s a balancing act. 

Alex Hutchison, CEO, EIS Super: Some occupations you can’t get cover or the cover is prohibitive, so the occupation we look after, the energy industry is very dangerous and I think a lot of those people have been trying to get retail insurance. 

MT: They pay a lot more than what they are paying through the fund.  

AH: I look at our situation and from a process point of view, you talk about the claims committee, every claim that’s paid or not paid is reviewed by the claims committee. And it’s a very labour-intensive process. 

To be fair, my understanding is most trustees actually have the same type of thing, you’ve got the claims committee, you can go through the claims committee. So I think insurance in super is important, certainly if you have occupations where the occupations are dangerous. 

PB: And your claims committee is not going there saying how can I knock this claim out. 

AH: No. 

PB: You’ve got a member’s interest in it. 

AH: No you’re saying is it a proper claim, should it be paid for under this policy. 

PB: Yeah. 

AH: And there are occasions that we go, if the insurer has said we don’t want to pay that, we forcibly will go back to the insurer and go and query. 

AH: And that’s what our duty is. Likewise when it’s declined, you go well if it’s properly declined, it’s properly declined. 

TG: So there’s no doubt that the claims management process needs to be reviewed and better communicated and we need better systems. 

Paperwork gets sent out and we are not putting ourselves in their position where if you take on the basis that they are claiming because they rightfully need to claim, they’re usually in some sort of stressed position, then they get bombarded with paperwork and all this sort of stuff. We’re not helping the process, and I think there’s a lot of work to be done on a claims management basis. 

AH: Well are we adopting the insurance process, or adopting the trustee process.  

PB: Yeah. And think about some of the things that are going on with MetLife having moved out of the space, but I know some other funds have picked it up, but certainly one of my clients is having the difficulty of separating from an insurer, and without going into detail it’s hell if you’re a member with a claim.

Part one

Part two

Part four