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ASIC insurance inside super report reveals 'confused and overwhelmed' members
The usability of insurance inside superannuation has been marked down by the Australian Securities and Investments Commission (ASIC) with the regulator releasing a consumer research report which reported a third of people found it complex and difficult.
The findings of the research has been published in ASIC Report 673 which pointed to the better understanding of those who obtained insurance via a financial adviser.
Where insurance inside superannuation was concerned, it stated that: “After interacting with their fund, about a third of the participants spontaneously reported that they felt confused, overwhelmed or uncertain”.
“They found insurance complex and difficult. Some discovered information they did not understand or did not know how to respond to. This often caused them to delay in engaging further with their fund on insurance after their initial interaction,” the ASIC analysis of the report said.
“The research highlights some challenges for trustees, such as those associated with providing more tailored information for members. At the same time, there is an opportunity for trustees to significantly improve their members’ experience by improving communication to members about insurance, including on their websites,” ASIC said.
It said many of the problems members experienced may have been reduced or avoided if the information they sought was easy to find, clear and balanced.
“Superannuation trustees are encouraged to consider the issues raised in this report and how they might improve the experience of their members when they seek to engage about insurance,” the report said.
The report, undertaken by Susanbell Research, found that “some members expressed a need for something beyond straight factual information but they did not use the term advice or consider that they needed a financial adviser”.
“They called it an ‘independent take’, a ‘review’, or asked for ‘specific’ information that was relevant to their personal circumstances – for example how much cover to have at a certain life stage.”
“In our view, these members had only a vague idea about how superannuation funds give information or provide advice and did not appear to understand the demarcation between the two. When they did not receive the guidance they expected, they were left disappointed and unsure what to do next.”
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It is disappointing to hear about the research results.
Speaking with many super fund trustees, I know how hard they work in communicating their insurance offer to their members.
It perhaps goes to highlight why so many members seek the (unnecesary) support of lawyers at claim time (hearing up to 60%).
As an industry we need to do better.
The telling comment in the entire article is this:
"...members had only a vague idea about how superannuation funds give information or provide advice and did not appear to understand the demarcation between the two."
EXACTLY the point! Because ASIC and the regulators created this demarcation and made it so darn difficult for average Jo to get the help she needs without having to pay for an SOA! Where does the report actually realise that this is the core of the problem? No doubt it's missed because then it would be ASIC having to report on itself as being the problem.