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Insurance in super code updated
Due to recent legislative changes, updated guidance has been released by three major superannuation and life insurance bodies on claims handling guidance for members with life insurance in group superannuation.
The Association of Superannuation Funds of Australia (ASFA), the Australian Institute of Superannuation Trustees (AIST) and the Financial Services Council (FSC) updated the guidance to maintain or enhance key components of the Insurance in Superannuation Voluntary Code of Practice, to ensure that consumer protections were maintained in areas which were not currently covered by legislation and regulation.
“Looking after the insurance needs of vulnerable members is of critical importance, particularly in light of the challenges many superannuation members still face as the national economy recovers from the COVID-19 induced economic downturn,” the three organisations said in a joint statement.
“The Voluntary Code owners have recently consulted superannuation trustee members about further protections for vulnerable consumers and the new guidance to trustees will incorporate this feedback and go beyond the statutory framework to help them improve member outcomes for this important cohort of consumers.
“The guidance will help trustees meet consumer expectations, and help members by setting out the level of service they should expect from their superannuation fund when making a claim on their life insurance.”
The code was launched in 2018, however, significant parts became redundant due to legislative reform and regulatory changes.
The Protecting Your Super and Putting Members’ Interests’ First legislative packages made substantial sections of the code redundant.
“For this reason the code owners (AIST, ASFA and the FSC) agreed in 2021 to maintain only those sections of the code upholding consumer protections that were not supported by regulation and to do so through the use of guidance,” the guidance said.
“One example of recent and ongoing change is the release of the Australian Securities and Investments Commission’s (ASIC’s) information sheet for insurance claims handling (INFO 253).
“For RSE [responsible superannuation entity] licensees the information sheet outlines Australian financial services licence (AFSL) obligations that apply to the provision of ‘superannuation as a trustee service’ and this includes claims handling obligations.
“These claims handling obligations align with the amendments to the Corporations Act that remove the exemption of claims handling as a financial service.”
However, Super Consumers Australia and the Financial Rights Legal Centre (FRLC) criticised the move, saying they had dumped a code of conduct to only replace it with guidance.
Xavier O'Halloran, Super Consumers Australia director, said: “Super fund lobby groups have dumped a code of conduct that could have improved how funds handle life insurance claims.
“The lobby groups have opted to reject their own code of conduct which was meant to improve how funds handle claims for consumers just a few months before they would finally be on the hook to comply.
“The Insurance in Superannuation Voluntary Code of Practice, in their own words, was the superannuation industry’s commitment to high standards when providing insurance to members of superannuation funds. Both the Productivity Commission and Banking Royal Commission recommended that this industry code become enforceable.
Karen Cox, FLRC chief executive, said: “Replacing the objective of an enforceable code with a couple of 'papers' sends a message to consumers, governments and the public that the superannuation industry is not serious about creating and improving standards that consumers can rely on.
“Superannuation bodies are often guilty of failures in claims handling processes that have serious detrimental impacts on clients. This includes failing to pass on consumer complaints to insurers, neglecting to provide consumers important information or documents such as claims forms or product disclosure statements.”
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