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 firstname.lastname@example.org.
While the turmoil in Federal Parliament and the Financial Services Royal Commission were getting all the headlines, other low-key but very important changes had the biggest impact on super funds in 2018 and will again in 2019.
Productivity Commission Report Not the Main Game
Opinion polls have been pointing to the ALP as the favourite to win the next election. Either way, the priority of the Government after the election is going to be on implementing the recommendations made by the Financial Services Royal Commission. The recommendations made by last week’s Productivity Commission’s report on superannuation are going to have a lower priority, although they will continue to influence the policy debate.
Many of the Productivity Commission’s recommendations echo the draft recommendations they made last year, many of which have already been picked up by the Government or incorporated into the Insurance in Super Code. Their signature recommendation of allocating new entrants to the workforce one of ten “best in show” funds (unless they choose an alternative) is a political hot potato that probably won’t be implemented.
Royal Commission Report Set to Dominate the Policy Debate
The Financial Services Royal Commission will issue its final report right on time on Friday, 1st of February 2019, and the Government will make it public immediately. Whatever recommendations are made by the Royal Commission, it is highly likely that both the Government and Opposition will commit to implement all of them after the election.
My prediction is that the Royal Commission will recommend:
a ban on “grandfathered” trailing commissions;
more litigation and less negotiation with companies that break the law;
a new superannuation regulator;
a new or increased focus on conduct regulation;
a large number of prosecutions arising out of their case studies.
All of this is going to take a while to put in place. Legislation is not likely until the end of 2019 and implementation will take place from 2020.
In the meantime, the larger industry funds are experiencing higher than forecast member and contribution flows as they are perceived to have fared much better than their retail competitors at the Royal Commission.
While the superannuation world waits for changes arising from these high-profile commissions of inquiry, the APRA Outcomes Assessment Test, the Insurance in Super Code and re-engineered super fund reporting to the ATO are requiring major investments from funds and are already driving major changes.
New APRA Test, ATO Reporting and Insurance Code the Real Drivers of Change
APRA Outcomes Assessment:
APRA released a package of new requirements for APRA-regulated super funds in December 2018 intended to strengthen the delivery of quality outcomes for fund members. The key change is an annual outcomes assessment, requiring funds to annually benchmark and evaluate their performance in delivering these outcomes as part of their business planning cycles. Not only will this lift standards in super, it will also facilitate the merger of poor performing funds into better performing funds.
New ATO reporting:
New systems for super fund reporting (known as the MATS and MAAS projects) to the ATO will require funds to report on a near real-time basis, thus helping to identify employers not meeting their obligations. This will massively increase the volume of information being sent to the ATO and will mean that myGov and new online commencement forms will have much more comprehensive and up to date information.
Insurance in Super Code of Practice:
Most super funds are in the process of implementing higher standards and quicker claims processing for their members as part of implementing the Insurance Code. Many of the changes in the PYS legislation and recommendations made by the Productivity Commission were already incorporated in similar requirements of the Insurance Code. This includes the cessation of insurance cover for low account balance members and opt-in insurance for many younger members.
IQ Group is Here to Help
The IQ Group is keeping abreast of all these changes and is both mapping their impacts for many of our clients and designing and implementing solutions that improve the member experiences.