Super funds have been reprimanded and warned to clean up their act after taking too long to process death benefit claims for grieving families, writes Legal Practice Director, Jeff Garrett.
About 70 per cent of Australians with life insurance (otherwise called death benefits) and total and permanent disablement (TPD) insurance hold their policies within their superannuation fund, where premiums and costs tend to be cheaper.
Unfortunately, the superannuation insurance industry is rife with misconduct and systemic issues. Complaints are on the rise as more people struggle to access the benefits they are entitled to within a reasonable timeframe.
One perpetrator named and shamed recently is AustralianSuper, which has been criticized by the Australian Securities and Investments Commission (ASIC). ASIC has demanded that the insurer compensate claimants who have had to endure months of delays, which cost the insurer $4.2 million in additional payments.
As a law firm with a dedicated Estate Administration department, our lawyers continue to witness super funds delaying death benefit payments. We are pleased to see the corporate and financial regulators holding super fund AustralianSuper to account and forcing it to compensate up to 7,000 beneficiaries impacted by their misconduct.
This is an important precedent set by the industry watchdog, which puts the industry on notice.
At Attwood Marshall Lawyers, we know full well that delays in payment of death benefits and disability claims are not just restricted to AustralianSuper but are rife across many super funds and insurers.
We had a matter where the fund wouldn’t release information on the account without our client, the mother of the deceased’s minor children, providing identification. Her Medicare card, bank card, Tafe Card, pension card and her expired drivers licence was provided to the super fund as proof of identification. However, the fund refused to accept the expired licence and made our client renew her expired drivers licence in order to proceed. She had no money so this was an expense that she didn’t need. When the renewed licence was provided to the fund, they then further delayed the claim as our clients’ bank account had been closed because there was no money in it!
In dealing with another well-known super fund, they also refused to provide account information and asked for an initial legal letter and the Will. The super fund then said they had no record of us contacting them, despite responding and referring to our letter and the documents in their reply email. They also kept changing their requirements to release the information for the account.
These examples are just some of the inane excuses we have witnessed super funds use to regularly delay processing a claim.
Industry-wide recognition
This month, ASIC Commissioner Simone Constant warned big super CEOs that they would crack down on the $4 trillion sector due to failures to track end-to-end death benefits claims handling times and “weak” practices.
And after Australia’s largest super funds faced a Senate committee last month about their treatment of vulnerable customers, deputy chair of ASIC Sarah Court also confirmed all super funds would be “put on notice” as she believes “the delays in payment of death benefits and disability claims in the superannuation sector are significant.”
ASIC has also specifically outed another badly behaved super fund, CBUS. The corporate regulator has sued the $94bn super fund for delaying $20m of death and disability payments. More than 10,000 CBUS members and claimants’ death and disability insurance claims were excessively delayed – many for more than a year.
ASIC acknowledged the source of CBUS’ delays was the administrator but alleges the fund failed to properly assess the scale of the delays and act promptly to redress them, despite being told “very large numbers” of death and disability claims were older than 90 days.
Positively for claimants, although the administration of death and disability claims is often outsourced, it is still under the responsibility of the super funds, which makes the funds liable for any delays.
Furthermore, deputy chair of ASIC, Sarah Court announced that it is conducting a deep dive into super funds’ actions in delaying the payment of death benefits and disability claims. The findings will be included in a report that will be released in early 2025, and more court action could be taken to hold super funds accountable.
Having trouble with a life insurance/ death benefits or disability claim?
The Australian Financial Complaints Authority is the industry watchdog for super death benefit and disability claims. Complaints have risen year on year, with more than 7,300 complaints recorded in the last financial year, an increase of five per cent from the previous year. A quarter of complaints were related to delayed claims handling.
While acknowledging the thousands of complaints made, super fund consumer groups say many more complainants are fatigued by the drawn-out back-and-forth dealings with super funds, ultimately giving up demanding accountability once they receive their entitlements – or worse, giving up on their entitlements altogether.
Attwood Marshall Lawyers is here to help carry the burden and hold insurance companies and superannuation funds accountable. Our goal is to ensure claimants receive their full entitlements in a reasonable time frame.
Attwood Marshall Lawyers – supporting you through life’s most challenging times
If you have been named as the beneficiary of someone’s superannuation death benefits, we know how difficult and taxing it can be to deal with the bureaucracy of super funds and insurance providers.
Attwood Marshall Lawyers have one of the largest, most experienced Wills and Estates departments in Australia, with dedicated teams who practice exclusively in estate administration, estate planning, and estate litigation.
Whether you are the executor of an estate, or a beneficiary, if you need assistance with the administration of an estate, obtaining superannuation death benefits, or obtaining probate or letters of administration, we can help.
Please contact our Wills and Estates Department Manager Donna Tolley on direct line 07 5506 8241 or email dtolley@attwoodmarshall.com.au to discuss your matter any time.
Our lawyers are available for appointments at all our conveniently located offices at Coolangatta, Southport, Robina Town Centre, Kingscliff, Brisbane, Sydney and Melbourne.
