Super funds are often waiting a number of years before obtaining a life insurance policy document, according to a leading lawyer.

Holding Redlich partner Jenny Willcocks says it isn’t unusual for funds to operate for years without the policy document.

She told an Australian Institute of Superannuation Trustees conference on insurance in Melbourne that the delays are often caused by fund trustees not giving insurers all the relevant criteria for them to produce a policy document.

“This has got to change, as the policy document has to cover all the bases or it will lead to disputes,” she said.

An example was cited where a trustee thought members were covered by the proposed policy and it transpired they were uninsured.

They took the trustee to court, the corporate regulator became involved and an enforceable undertaking was issued against the fund.

Ms Willcocks says meeting the conditions of the undertaking and external advisers cost the fund about $7 million.

“I see protracted negotiations of policies because the trustees haven’t addressed all the issues in the (insurance) tender document,” she said.

“If there is a mismatch of issues, it is going to create problems and increase the cost of the insurance.”

Ms Willcocks says it is important to state the objectives of what the fund wants from its insurer and what it wants to offer its members.

“The fund should be asking insurers about their claims history and how they dealt with claims,” she said.