Life insurers want to accelerate the speed at which someone on an IP claim can get back to work and that is not something the industry should apologise for, according the FSC’s Senior Policy Manager for Life Insurance, Nick Kirwan.
He was responding to a statement from insurance law firm, Maurice Blackburn Lawyers, which warned that insurers’ renewed calls for greater involvement in worker rehabilitation is part of a push to expand their powers so fewer claims will need to be paid out.
Kirwan told Riskinfo that in one respect what the law firm is saying is right. “They are saying this is a way to reduce claims costs and in a way it is. And that is a good thing.”
As an example Kirwan pointed to someone who might be on an Income Protection claim, who doesn’t have health insurance and is on a waiting list for a knee operation but can’t pay for it privately – perhaps a ‘tradie’ who can’t work until the knee is fixed.
In this scenario the life insurer is paying this person a certain amount per month while they are on the waiting list, so if the insurer could get them back to work three months earlier by paying for the knee operation itself (which could be cheaper than the three months of payout) then it is a win-win all round.
Kirwan says the person gets back to work sooner, everyone else in the risk pool wins and there is less risk of that person going onto state welfare benefits after a prolonged period off work, which means the taxpayer wins too.
“Who loses out by getting that person back to work sooner? The life insurer wins as does the person involved, it’s difficult to see a loser in any of that.”
Kirwan says the industry should not apologise for wanting to get someone back to work earlier.
He says this type of example would be aimed at people who would otherwise slip through the net between not having health insurance, a long waiting list and having used up their Medicare allowance.
“For these people life insurers would like the option to say ‘in your case it makes sense for us to help you’.”
However he was also at pains to point out that life insurers to do not want to dictate what sort of treatment people should, or should not, have.
“If someone is on a waiting list it is for the treating physician to decide on the treatment; it is not for the life insurer to get involved and we do not want to be involved.”
He reiterates this is about accelerating the treatment people need.
Life insurers do not want to become health insurers
“Life insurers do not want to become health insurers – it is about filling in the gaps for anyone who slips through. We are not suggesting life insurers should have any say in what treatment people need and any change to legislation should make that clear.”
Maurice Blackburn’s Principal, Josh Mennen says in the statement that the FSC has “…revived its old campaign to change the law so insurers only need to pay the medical bills of a sick worker instead of paying the entire insurance claim”.
“It’s deeply troubling that the FSC is seeking to re-agitate this issue at the peak of a pandemic crisis which is devastating the employment prospects of all Australians, but particularly those living with injury and illness,” Mennen adds.
He says it’s irresponsible to suggest that an insurer should be calling the shots on claimants’ medical treatment plans in an attempt to get them back into a severely diminished job market.
“What insurers should be instead focusing on is the ongoing and timely payment of legitimate claims so that disabled consumers can afford the medical and other support they need – and without the inappropriate interference of an insurer in those therapeutic relationship,” the statement says.
Nice to see that the folks at the FSC haven’t lost any of their skills of diversion or of the obfuscation.
The original Maurice Blackburn complaint related to the lump sum TPD payments. They were raising a legitimate concern, as we already have one very large industry super fund with the capacity within its TPD definition to “dole out” a lump sum TPD benefit in stages, under the guise of “rehabilitation”. I always wondered how that particular concept worked given that lump sum TPD benefits in super are the subject of a lump sum tax. Then again that, lump sum tax is rarely disclosed in any meaningful way in any industry fund insurance brochure (they are not PDS is in the legal sense) that I have sighted, so the claimant may not know when the offer is made at the insurer and Trustee discretion..
In his response on behalf of the FSC, Mr Kirwan appears to have diverted to what is essentially an argument about income protection benefits. Either that, or there is a lack of precision in the statement. He says it’s not for insurers to get involved in treatment but that’s not quite true. Any professional level income protection contract worth its salt will pay rehabilitation benefits of two types if that treatment is pre-approved by the insurer.
That’s involvement under another guise.
The second and more important concern is the specific clause that appears in most income protection contracts which requires the insured when on claim “to be taking the advice of his medical practitioner” I have seen of that clause exercised in real life. One of my clients had a severe back injury, and was six months into his claim, when his treating orthopedic surgeon informed him that he should have a disc operation. The claimant, an ex-footballer who spent most of his days lying on his back crying at the pain, feared that his condition could be worsened by back surgery.
The insurer, with whom I had had great claim experiences prior to this episode, threatened to stop his claim payments if he didn’t take the advice of his treating medical practitioner and have that back surgery.
This was despite the fact that at that time, some 20 years ago, back surgery did not have a high rate of success and often created more difficulties than it attempted to solve.
So right now that clause is still in income protection contracts and is still capable of permitting the insurer to get involved in the treatment.
Might be idea if the FSC had access to a library of income protection policy documents. Just saying!
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