Superannuation trustees have started to make changes to better meet their members’ insurance needs but some still need to improve their member communication and claim processes, which “is simply not good enough”, ASIC commissioner Danielle Press told the Australian Institute of Superannuation Trustees today.
She was speaking at the release of ASIC’s Insurance in superannuation report which examines what actions super trustees have taken to make meaningful improvements to their group life arrangements for their members.
The ASIC review examined at 15 trustees, focussing on group insurance design and data, claims handling practices and member communications and engagement.
Press said the review found:
- Trustees had made changes to the design of their insurance arrangements to better meet their members’ needs and had improved how they used data to monitor member results.
- For example, 12 of the trustees had changed the criteria used to determine whether a total & permanent disablement (TPD) claim would be assessed under a restrictive definition and/or have amended these definitions.
- Many trustees had taken steps to streamline their claims processes to make them easier for members to navigate and enhance their oversight of insurers’ claims handling practices.
- Some trustees had introduced death, TPD and income protection claim guides.
- Some trustees had improved how they explained their insurance offers to help members understand and make informed decisions about their cover.
- But some trustees had not improved their member communications and claims processes enough.
For the report, ASIC had written to the 15 trustees individually to provide detailed feedback and areas for improvement.
“While improvements have been made, work still needs to be done across the board,” Press said. “All super trustees should review the report and take action to make improvements to benefit the members they serve.”
Press urged trustees to focus on five areas of improvements: improve use of real-time data to monitor member results and to proactively identify how to better meet members’ needs and provide value for money; designing and delivering better claims processes to improve their members’ experience; embedding a process to continuously improve their member communication and processes to make it easier for members to understand their cover; and ensure they had “robust and fit-for-purpose” systems, processes and controls to effectively manage how insurance was provided.
“Ultimately, we want members to have confidence they are getting value from the insurance offered through their superannuation and that it is meeting their needs,” Press said.
“ASIC provides consumer information on insurance through Moneysmart to enable consumers to check what insurance they have through their super and whether it’s appropriate for them.”
The ASIC report revealed of about 15m Australians who had accumulation-phase super accounts,
about 8m had some form of cover through super. About 71% of accounts with insurance had the default cover automatically provided by the super trustee.
ASIC had since 2019 worked on tackling consumer harms in life insurance. That included a focus on policies that unnecessarily eroded members’ retirement balance, policies that failed to provide cover if members became disabled and claims handling processes which were unnecessarily onerous or lengthy.
The regulator had also taken action against trustees who had failed to met their obligations
related to group insurance. Further, a range of regulatory reforms had been implemented
since 2019 designed to improve the way trustees delivered group insurance.