News the Government will introduce enforceable life insurance service standards within the large super funds attracted a high level of reader interest this week…
The Federal Government is set to release draft proposals detailing changes focussed on mandatory and enforceable life insurance service standards for large APRA-regulated funds.
The move comes on the heels of November’s announcement by ASIC alleging more than 10,000 members and claimants of the Construction and Building Unions Superannuation Fund waited more than 90 days for claims to be processed (see: Super Fund Sued Over Claims Handling Failures).
In a statement, Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, says his proposed reforms will initially target critical areas where complaints data shows the greatest need for improvement. These include:
- The timely and compassionate handling of death benefits
- Fair and efficient processing of insurance claims
- Clear, respectful and accessible communications with members
Jones says: “While most funds offer services that meet or often surpass community expectations, there have been some areas where some funds have fallen short.
“Super funds have a responsibility to support members or their beneficiaries during these times, not add to their stress.”
He says the draft standards will be released for public consultation, but did not specify a timeframe.
Meanwhile, the Council of Australian Life Insurers has announced it will participate in the government process to develop new standards, stating: “People rightly expect their life insurance claims to be dealt with quickly and efficiently.”
Elsewhere, Aware Super CEO Deanne Stewart says service standards would be good news for super members.
“Aware Super welcomes the development of strong, consistent and industry-wide service standards, something for which we which we have advocated for the benefit of all super fund members,” she says.
“There is always scope for improvement and we remain focused on continuing to enhance our response times and quality of interactions with members, which requires constant effort and innovation.”
All to the good I suppose. Super fund members deservedly treated with respect but often are still not.This is confirmed by recent exposure of the link between commissions and claims KPIs from insurers to trustees
ASIC should now take a real look at what's being provided by our friends the life insurers for RETAIL ADVICE. Quantify, for example, the deliberate reductions in new business administration efficiencies, a reduction in underwriters and tele-interviewers.
And what appears to be an increasingly obnoxious habit of "walking back" pre-assessments after the application is made
Reductions in operating costs are necessary in the eyes of the insurers because of the impact of LIF on profit margins and CEO bonuses.Some life insurers in my experience seem to have forgotten that the whole idea of running an insurance company is to keep up the flow of genuine new business into your pool, or to put it more simply getting the business on the books at the rise price commensurate with risk.
The utilisation of Duration Based Pricing to keep up the flow of new business is forcing all of us up a dry gulch, where everyone wears black hats
These days advisers are not tied to insurers by volume bonuses and to me that is one of the only redeeming benefits of LIF. Which means that advisers vote with their feet when service standards of new business and claims is not what it used to be . Furthermore there seems to be no light at the end of the tunnel.
Frankly life insurers got what they deserved when they welcomed LIF
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