Last week, the Australian Securities and Investments Commission (ASIC) released a report highlighting issues with the superannuation industry's handling of death benefit claims and the impact these have on grieving Australians.
Superannuation impacts all of us and with each death benefit claim, there is a family navigating complex processes at a difficult time. Therefore, improving member services for superannuation fund members is a top priority for ASIC.
ASIC’s review of ten major trustees, which oversee 38 per cent of member benefits regulated by the Australian Prudential Regulation Authority (APRA), uncovered significant issues related to delays, poor customer service, and inefficient claims management. This report outlines ASIC’s observations from the first phase of its member services project.
Key observations from ASIC’s review
ASIC’s review identified several areas where current practices fall short of expected standards. Key areas of concern include:
1. Poor service and excessive delays: Long processing times by many trustees caused additional emotional and financial distress for grieving families. The review also identified instances of poor or inadequate support provided to claimants experiencing vulnerability.
2. Poor communication and engagement: Communication was frequently unclear, inconsistent, and lacked empathy. Communication materials were difficult to understand, leaving grieving families frustrated and confused.
3. Lack of ownership and oversight: There was a lack of governance and visibility over insurers or administrators’ actions, even though trustees are ultimately responsible. There was no robust approach to monitor end-to-end claims handling times or for both insured and uninsured claims.
4. Weak data and reporting practices: All reviewed trustees experienced challenges providing data to ASIC about their end-to-end claims handling times. Poor quality assurance of data was also observed with obvious data errors not being corrected before submission to ASIC.
5. Gaps in process and policy clarity: Procedures were often unclear or overly complex, especially around eligibility and decision-making in disputed claims. Inconsistencies were observed in how claims were handled, which often led to delays and confusion.
6. Inadequate support for First Nations claimants: Across the review, policies and procedures to support First Nations claimants were generally lacking. Claims for members living in remote or very remote postcodes with high proportions of First Nations peoples (First Nations postcodes) took longer to process compared to other members.
The path forward
ASIC made 34 recommendations to improve these practices, emphasising the need for better service, faster response times, clearer communication, and more support for vulnerable claimants.
Key takeaways for trustees when implementing ASIC’s recommendations include:
- To drive meaningful improvements, conduct a gap analysis of your current claims handling practices against ASIC’s observations in Report 806.
- Prioritise member experience in both policy and execution.
- The monitoring of the end-to-end claims process should include measurable targets of effectiveness and relevant performance objectives (covering both in-house and outsourced functions).
- Investing in better guidance and staff training, so that teams are equipped to provide effective support with compassion.
- Improving communication and engagement across all forms of interactions with the claimants.
ASIC has outlined trustees should act now to strengthen their claims management frameworks and will be monitoring progress closely.
We’re here to help
We recognise that each trustee faces unique challenges and there is no one-size-fits-all solution. Improvements must be meaningful and reflect the dignity and respect that every family deserves in their most vulnerable moment.
For support in assessing your current practices and implementing effective solutions that align with industry standards, please don’t hesitate to reach out.
Learn more about how our Financial Services services can help you
