Super Consumers Australia says life insurers are falling “well short of basic standards” after its analysis of claims data revealed worrying trends. 

The analysis of claims made by super members found that one-in-five claims for income protection (IP) and total and permanent disability (TPD) insurance take longer than the insurers’ commitment under their own industry code. 

About 20.4% of all IP claims in super exceed the Life Insurance Code of Practice’s two-month time frame commitment and 22.7% of all TPD claims in super exceed the Code’s six-month commitment. 

Super Consumers Australia looked at Australian Prudential Regulation Authority (APRA) claims data published in the last five financial years to June 30 2023 and the latest Australian Financial Complaints Authority (AFCA) Annual Review. 

The consumer advocacy group says many Australians hold life insurance that is bundled with super, usually by default. 

“It is an industry that costs Australians over $6 billion per year, however it is very complex,” Super Consumers Australia says. 

“It is critical that super funds and insurers are held accountable for the quality of their products and customer service.” 

The advocacy group has called for a number of changes. It says the Government should mandate customer service standards for funds and also establish an independent review of insurance in super, to establish whether the status quo is delivering a net public benefit and how insurance in super could be improved. 

The group also wants ASIC and APRA to promptly publish detailed data on how individual super funds and insurers are performing, 

Life insurers through their peak body, the Council of Life Insurer (CALI), say the industry remains committed to working with superannuation fund trustees to continuously improve claims handling in superannuation. 

“Meeting customer expectations is important and Australia’s life insurers understand that people expect their life insurance claims, including for cover held through their superannuation, to be dealt with quickly and efficiently,” CALI CEO Christine Cupitt said. 

She says AFCA’s latest complaints data shows that consumer complaints in relation to life insurers have dropped 24% compared with the previous financial year. 

“This decrease reflects the significant investment Australia’s life insurers have made in improving their internal processes and practices.” 

She says the independent Life Code Compliance Committee (CCC) closely monitors the industry’s application of the Life Code and the conduct of individual insurers. 

“It has significant powers to impose sanctions and financial penalties on organisations subscribed to the Life Code. These measures have been developed in conjunction with consumer groups to ensure they meet community expectations,” Ms Cupitt said. 

She says the Life CCC’s latest annual report shows life insurers have acted to correct breaches of the Code over the last year. “This included implementing improved processes, conducting training for team members and providing financial compensation to customers.”