LCCC reports on group cover in superannuation
/A report produced by the Life Code Compliance Committee for the year to 30 June 2020 shows the superannuation risk insurance market is shrinking, with an increase in complaints.
Across the group insurance industry, there has been a 20 per cent reduction in the number of insurance policies to the cancellation of cover within the superannuation industry, the report says due to implementation of Protecting Your Super and Putting Members’ Interests First legislation. The new laws came into effect after the Financial Services Royal Commission recommendations were made. While implementing these laws, there was a 23 per cent reduction in group superannuation.
As it relates to claims, the report notes most claims decisions were made within the allocated timeframes in the Life Insurance Code of Practice. Eighty per cent of income-related claims decisions were made within two months, and 91 per cent of non-income-related claims decisions were made within six months.
Claims-related complaints increased by 40 per cent in the same period, with the most common complaint being the amount of time the claim took. There was also a 25 per cent increase in complaints about claims decisions.
After discussion with insurers, it was found the office impacts of the pandemic both in Australia and overseas was impacting claims assessment times, which was the cause of the complaints.
Other findings include:
Ninety-three per cent of isolated breaches of the Code of Practice were caused by people
Human error accounted for 34 per cent of breaches by people
Staff not following established processes caused a further 32 per cent of the breaches by people
Life Code Compliance Committee’s Annual Industry Data and Compliance Report for the year to 30 June 2020
