Insurer stumbles on TPD definition

An insurer's use of an old total and permanent disability (TPD) policy definition has seen it directed by the Superannuation Complaints Tribunal (SCT) to review its decision to reject a member claim.

The SCT ordered both the insurer and the superannuation fund to review their rejection of a member's TPD claim on the basis of the insurer having used an old definition deemed to be less beneficial to the member.

The key difference was that the old definition of TPD was that the complainant needed to be deemed "unable ever again to work for reward in any business, occupation or regular duties for which she is reasonably qualified by education, training and experience", while the more appropriate new definition was that she was "unlikely ever again to work for reward in any business, occupation or regular duties for which he or she is reasonably qualified by education, training or experience".

The SCT pointed out that all of the insurer's assessments (including its submissions to the tribunal), had referred to the old definition and that while the superannuation fund had utilised the new definition, it had not sought to correct the insurer.

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"While the tribunal notes that the trustee has assessed the complainant's claim using the ‘unlikely' definition, it has not drawn the insurer's attention to or shown that it has turned its mind to the fact that the insurer has assessed the complainant's claim on the incorrect definition," the SCT determination said.

It said that in the circumstances, "the tribunal considers it appropriate that the insurer and the trustee reconsider the merits of the complainant's claim using the correct ‘unlikely' definition".