Rising claims in super the 'new norm'

Life + Health InsuranceNEWS, Wednesday 15 April 2015.

The current increase in superannuation life insurance claims is driven by a number of factors, including a sluggish economy, according to TurksLegal partner Alph Edwards. 

“We have seen an unprecedented rise in claims through super,” he told the recent Financial Services Council Life Insurance Conference in Sydney.

“People have become more aware of insurance in super today, and we have seen the growth of the specialist super lawyers. This is the new norm.”

Mr Edwards says a pick-up in the economy would make a difference, but insurance in super will remain a target for disputed claims due to the sums involved.

William Roberts Lawyers Chairman Robert Ishak told the conference super has become the focus for claims since workers’ compensation rules were tightened up.

“When lawyers get involved in filling in the forms, they have a mindset this will lead to litigation,” he said.

“We have a focus on a no-fee-for-no-win basis, so they run an adverse claim.”

Mr Ishak says insurers must be sure they can stand by decisions to decline claims, and they should inform members there are alternatives to using lawyers, such as ombudsman services and the Superannuation Complaints Tribunal.

“Should a trustee or insurer receive a claim, they would be wise to put the dispute to an independent lawyer as early as possible,” he said. “I think the trustees and insurer will know when a claim is a 50/50 decision.”

Mr Edwards says trustees and insurers should avoid litigation by making sustainable decisions that can withstand legal challenges.

“Both should be able to defend their decision in court,” he said. “And they need to reach this decision as soon as possible.”

Mr Ishak says obtaining independent advice is crucial when assessing whether to defend claim decisions.

“If the independent advice says pay the claim, then pay it quickly. But it is also important not to cave in if the trustee and insurer think the decision is right after advice.”