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Industry group calls for deadlines on group claims

A paper examining claims management in group life insurance recommends maximum timeframes for responding to superannuation fund members’ requests.

Claim forms should be issued within five days of a request, the Insurance in Superannuation Industry Working Group (ISWG) says. Acknowledgement of a claim once paperwork has been received should also be within five days.

Initial assessment of a claim should be completed within 10 days, and progress updates should not exceed 20 days. A super fund’s independent review of an insurer’s decision should be undertaken within seven days if the claim will be paid, or 15 days if refused.

Claims should be paid within five days if agreed, the paper proposes.

These timeframes should be included in the proposed group life update to the Life Insurance Code of Practice, it says.

“The timeframes seek to balance the competing objective of ensuring people claiming receive a prompt decision with the need for thorough investigation by the super fund.”

The paper also says if an insurer makes an adverse decision due to conditions not being met, it must allow the claimant to review and comment on the evidence.

ISWG Chairman Jim Minto says while most life insurance claims are handled well, there is room for improvement.

“We want claiming life insurance in super to be a ‘best-practice’ experience at what is a difficult time for a member or their dependants,” he said. “The process needs to be member-centric, as well as simple and consistent across the industry.”

The ISWG will issue further discussion papers in coming months, examining cover for young people, reducing inappropriate, multiple policies, improving super fund member communications on insurance, and improving data standards.

“Industry and stakeholder feedback will help shape an enforceable Code of Practice and good practice guidance for trustees to be published later this year.”

Submissions on the claims paper can be sent to ISWGPMO@kpmg.com.au by May 5.

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