To date, the implementation of Protecting Your Super (PYS) and Putting Members Interests First (PMIF) legislation has been a long and winding road and this will continue, with even more twists and bends, as the next round of changes come through.

The last two years have seen a myriad of changes to superannuation and its affiliated insurance but in the words of Billy Ocean ‘when the going gets tough, the tough get going’. It’s been great to see the industry take on these changes, to prioritise and protect members’ interests, with focus and determination. The year ahead will be one of the toughest yet, so let’s have a look at what’s coming up in regards to insurance in super.

Oct 2020         APRA SPS 515 Strategic Planning and Member Outcomes: annual performance assessment to determine whether the financial interests of the members are being promoted; Federal Budget implications; next round of ATO auto-consolidation (PYS).

Dec 2020        Implementation of various FSRC related legislation: enforceability of industry codes (eg. Insurance in Super Code of Practice), Insurance Claims handling to become a financial service; Universal Terms for Insurance in MySuper.

Mar 2021        APRA SPS 250 Insurance in Superannuation: requirements with respect to making insured benefits available to beneficiaries; Compliance with ASIC REP633: requirements set to provide improved consumer protections which many funds will be able to meet as they renegotiate their insurance policies.

Apr 2021        Design and Distribution Obligations and Product Intervention Powers Regime: Issuers and distributors required to have an adequate product governance framework to ensure products are targeted at the right people (this regime will affect almost all areas of the financial services industry).

Jun 2021        Insurance in Super Voluntary Code of Practice becomes binding and enforceable and funds must have transitioned and be compliant before this date.

Oct 2021         ASIC REG271 Internal Dispute Resolution: financial entities must meet ASIC’s standards and requirements for Internal Dispute Resolution systems and have an AFCA membership.

Dec 2020-21   Financial Accountability Regime: extension of accountability requirements to other APRA-regulated entities and directors/senior executives in accordance with the government’s response to the FSRC recommendations.

Ongoing         AFCA implementation and compliance

Unknown       Potential creation of a co-regulatory model for industry codes: Under a co-regulatory model, industry participants would be required to subscribe to an ASIC approved code and, in the event of non-compliance with the code, an individual customer would be entitled to seek appropriate redress through the participant’s internal and external dispute resolution arrangements.

As well as ensuring compliance and implementation of all regulatory and legislative changes, super funds will still be dealing with the continuing ramifications of COVID-19. IQ remains focussed on helping our clients navigate these changes and cut through the complexity of the year to come, supporting them to achieve the best outcomes for their members.

The insurance world keeps turning and regulations and standards are constantly evolving, but members still need their insurance and funds must continue to put members interests first, in everything they do.

By Kiara Leslie (Graduate Consultant) and

Sharon Campanaro (Principal Consultant and Head of Change and Learning Services)

Super’s Biggest Challenges in Insurance Claim Handling

Super’s Biggest Challenges in Insurance Claim Handling

The introduction of the Insurance in Superannuation Voluntary Code of Practice has meant greater consequences for funds that fail to comply. Should the Code become binding and enforceable, as recommended by the Royal Commission, then the consequences of non-compliance go one to become far more significant. It is more important than ever that funds have the right tools and processes in place to ensure they are able to make the right calls.

Last week, IQ Group ran their second discussion group on Claims Handling under the Code of Practice. Attendees of the discussion covered the range of challenges they were facing and discussed potential solutions. Here are some of the biggest challenges that were identified.

Reduced Claims Handling Timeframes

With the reduced timelines under the code, it is more important than ever to clarify at an early stage whether a member is making a claim, a complaint or some other contact.

Claims that are lodged late, or that have multiple or changing elements, were identified as being particularly difficult. Managing expectations was identified as key, with participants emphasising that funds shouldn’t make representations they cannot meet.

It may be difficult for large funds to be able to guarantee that a claimant was always able to talk to the same primary contact person, although some are able to do this.

Visibility of Member Information

There was significant discussion around the lack of visibility and access to relevant member information.

It was proposed that there should be a single, comprehensive view of claimant members to improve the member experience and the efficiency of claims handling. During the discussion, it was also was noted that the Insurance in Super Working Group recommended the development of functionality that could be owned by funds and cover all interactions with insurers, administrators, medical, legal and rehabilitation providers.

MAAS is Creating Volumes of Work

New reporting of changes to member details to the ATO (MAAS services) has led to increased reporting of deceased members to super funds – and these increased volumes are likely to continue. Many of these deceased members have died years ago but are only now triggering death claim processes due to the introduction of MAAS.

There is uncertainty about what reasonable steps need to be taken to pay unclaimed death monies (eg, notices in newspapers). Trustees need a policy to deal with unpaid death benefits. It was noted that unclaimed death benefits didn’t necessarily involve insurance claims but might just relate to the members superannuation benefit. IQ Group will therefore be drafting an unclaimed death monies policy and we will be providing this to those that participated in the recent claims handling discussion groups.

Identifying Vulnerable Members

There was discussion around how funds addressed vulnerable consumers. As the identification of a vulnerable member can be somewhat subjective, it is an area that warrants further discussion and definition. Vulnerable members need to be clearly identified, along with a rationale for their inclusion and an articulation of their additional needs. The discussion group identified a need for adequate reporting tools (eg, in workflow management systems) to capture these members and their contacts with the fund.

If you have identified any of these issues in your claims handling processes and would like to discuss possible solutions to these issues, you can reach out to us at sgosios@iqgroup.com.au.