In recent weeks the issue of claims handling has been in the spotlight, with ASIC announcing legal proceedings against one fund for alleged claims handling failures. There have also been media reports of another fund paying several million dollars to compensate the dependants of deceased members for delays in processing their claims.
On 20 November, ASIC wrote to the CEOs of all super funds, urging them to review their practices in handling death benefit claims and address any deficiencies. This followed concerns raised by the regulator in May 2024 about an observed increase in complaints about death benefits claims and earlier reports dating back as far as 2019, that had urged trustees to improve their claims practices.
ASIC found that many trustees were not tracking end-to-end claims times, particularly for claims that did not include insurance cover. Sometimes claims performance was only examined annually or using metrics such as claims volumes which could mask issues that more appropriate metrics would reveal, such as which parts of the claims process were responsible for delays. Earlier concerns identified by ASIC included deficiencies in information on claims processes and beneficiary nominations on fund websites.
Trustees boards are accountable for claims handling regardless of whether part or all of the process is outsourced to a third-party service provider such as an insurer or administrator. Members may be distressed and vulnerable following the death of a loved one or on experiencing a disability event, and they are unlikely to respond favourably to processes that are confusing or time consuming, or to claims that are subject to broken promises, double handling or unreasonable delays. Such processes are likely to result in complaints that can be time consuming and costly to resolve, as well as unwanted media attention that can affect new member acquisition and retention.
A well-designed and member-centric process that reflects members’ reasonable expectations, supported by communications that are proactive, empathetic and easy to understand, can go a long way towards supporting claimants during this difficult time and reduce the likelihood of complaints. This should be supported by a comprehensive monitoring and oversight framework that is led by a fund’s insurance operations team and subject to regular review, as well as member feedback surveys to ensure a culture of transparency and continuous improvement flows into the overall claims management process.
The first step for every trustee should be an insurance operations “health check”. How, and how often, are you measuring your claims handing? Is it governed by a comprehensive monitoring and oversight framework? Is data received on a real-time basis? Does the data include both insured claims and those where the member does not have insurance? Do you know how long every claim takes from the first inquiry from a potential beneficiary to the time the last beneficiary is paid? How is the claims staking process being governed to ensure complex claims are managed as efficiently as possible? Are there regular processes to follow up outstanding information to ensure claims are paid efficiently?
This health check could be extended to underwriting transactions (including consideration of straight through processing rates) and insurance engagements with contact centres. It could also consider complaints data on claims and to data provided by third parties. Is the claims handling data being reported by administrators or insurers consistent with services agreements? Do those agreements require the right reporting for the fund’s purposes? How current is the reporting from those third parties, and how regularly is it being reported?
Data collection and cleansing is only the first step. The next step is to analyse it, to ensure it is fit for purpose. Is the data sufficiently detailed to identify patterns that might be of concern among particular cohorts of members – such as those without insurance cover, those who interact with the fund verbally rather than via electronic means or those whose first language is not English? Is it sufficient to identify points where there are roadblocks in the process – for example, where beneficiary nomination forms are invalid or where beneficiaries do not apply for probate? Can it be used to identify patterns before they become systemic issues?
Member communications – printed, digital and verbal – are a vital part of the claims process. Many members’ first personal interaction with the fund is when they wish to make a claim and it therefore creates a critical first impression. Is the information complete, internally consistent, accurate and easy for members to understand? Does it explain how the claims process will work regardless of whether they have insurance cover or whether the process will be managed in-house or by a third party? Are forms easy to complete, and is the fund only collecting sensitive personal information that is essential for the purpose? Are communications issues over-represented in complaints data, and if so are there particular cohorts of members for whom the communications are not serving their intended purpose?
The work required to take a large and disparate collection of insurance related data and turning it into an insurance oversight framework that provides the board, board committees and fund management with the information they need to ensure the insurance processes are working well for all members, end to end, should not be underestimated.
We conduct holistic insurance operations health checks that cover all aspects of the claims process. Our cohort analysis ensures that you are measuring the right information for your fund’s membership, and we can use information about your membership to provide a fresh-eyes review of your member communications for accuracy, consistency and suitability. We can also conduct a deep dive analysis of your historical claims and complaints data, to identify patterns and areas of weakness.
