Specialist lawyer, John Berrill begs to differ with critics of the Insurance in Superannuation Working Group process, arguing it has the capacity to deliver genuine improvements.
It was disappointing to read the Super Review article (page 8) quoting a fellow plaintiff lawyer being critical of the work of the Insurance in Superannuation Working Group (ISWG) and the superannuation and insurance codes of practice.
Ms Kim Shaw was critical of the life insurance code of practice alleging it was a tick box exercise by the life insurance industry developed with little consultation from stakeholders and with no formal oversight.
She also asserted that the ISWG was only prepared to implement a similar weak code which concentrated on claims handling without any attention to consistency in definitions, processes or sanctions for breaches With respect, neither is correct.
The life insurance code was developed with substantial input from the consumer movement after a somewhat shaky start. It includes time limits on processing insurance applications, claims and complaints which do not otherwise exist in law. It also includes limits on surveillance and the industry has committed to some standard medical definitions.
Contrary to the assertion, the code has oversight by a code compliance committee which has the power to impose sanctions on defaulting insurers. The committee includes a consumer representative, Ms Alex Kelly, a senior lawyer from the Financial Rights Legal Centre.
The life code commenced on 1 July 2017. It is too early to tell how effective it will be but the code is a good first step with an important review in 2018.
For its part, the superannuation code is currently under active development as part of a suite of work being undertaken by the ISWG, including product design, governance and education.
Contrary to Ms Shaw’s assertion, the ISWG is addressing standard definitions and processes such as suitability of cover for young members, ease of opting out of cover and information sharing.
The ISWG’s work is a very different piece to the life code, although it will include a code compliance committee with powers to investigate and correct breaches.
It is baffling that commentary is being made about alleged shortcomings of a code that is still under development, including whether it will seek Australian Securities and Investments Commission (ASIC) approval.
Insurance in superannuation is a very important part of the retirement incomes system in Australia.
Billions of dollars have been saved for the Australian taxpayer in social security payments and it has provided retirement incomes for thousands of people whose working lives have been cut short because of disability or death.
However, group insurance in superannuation has had its problems over the past five years and they need fixing. The superannuation and life insurance industries have recognised this and have put substantial resources into the ISWG to make insurance in superannuation more efficient and value for money for consumers.
It is incumbent on consumer advocates to help achieve this.
John Berrill is the principal of Berrill & Watson Superannuation and Insurance Lawyers.
