Australia: Superannuation insurance policies: they are not state secrets

In the post-apocalyptic world following the recent Financial Services Royal Commission (Enquiry), I have dealt with a number of superannuation companies and their insurers concerning insurance held by one of their members. It has been revealing.

One of the recommendations that came out of the Enquiry was for "stale" superannuation policies to cease having insurance premiums deducted from them. Many people who work in industries such as the construction or hospitality industries can accumulate several superannuation policies as they move from employer to employer. There might be a few thousand dollars sitting in a policy which over time gets eaten away by the insurance premiums normally associated with that policy.

There was certainly some logic to the recommendation to protect those smaller superannuation sums from being further eroded by insurance premiums. But there are exceptions.

By way of example, I am acting for a client who had no less than 7 separate policies at the point in time when he suffered what is most likely a career-ending injury. So, in his case, it turned out to be advantageous for him to have multiple policies that he could claim upon in his time of need.

After his injury, he then closed all of those superannuation policies except one and consolidated them (i.e. rolled them over) into the one policy. That was sensible. But then I needed to establish what insurance coverage he had with each superannuation company at the time of his injury.

The experience of accessing details of those policies for my client has been "enlightening" to say the least. One would have thought that in the post-Enquiry era the financial services industry would be cleaning up its act and perhaps it has in some respects, but in other circumstances, there is a long way to go. The superannuation funds and insurers I have been dealing with are those that everyone would have heard of or seen on television.

Time and again, barriers are thrown up by them – usually under the guise of privacy issues. Of course, privacy is a serious issue, particularly in recent times when there has been fraudulent activity on superannuation accounts during the COVID-19 crisis. But my client had closed all his accounts but one, so it was obvious I was not seeking to extract any superannuation funds – my enquiries were simply about his insurance coverage in existence at the relevant time when he became incapacitated for work.

After initially requesting details of his insurance coverage in January of this year, one company had still not provided me with details of my client's policy by May, despite having been provided with certified copies of identification of my client and signed authorities to release information to me.

Despite writing to their nominated contact addresses in Sydney, Melbourne and Brisbane, three companies asserted they had not received or had lost my communications. How can that be? In no case, was it an incorrect address.

The standard of reading and comprehension displayed by some of the company representatives has left a lot to be desired. An extract from my diary note of one conversation is:

One company, after me writing to it a second time after receiving no response for 5 months, did provide a perfectly good response but sent it to an incorrectly typed email address. It was only after lodging a complaint with the Australian Financial Complaints Authority (AFCA) that I eventually received its email.

In another instance, my client could find no record of his Member Number. I explained that to the company in correspondence and sent various identifying documents and authorities. Despite that, it kept sending emails saying that it required 3 matching points of identification. But no attempt was made to explain what was missing. After a sort of guessing game on my part, it turned out to be the Member Number which was missing but which I had already explained could not be recalled.

I was directed by the same company to lodge documents by way of its website. When I attempted that, it did not work. It was hard not to feel that this company was being obstructive and unhelpful rather than seriously being concerned about my client's privacy.

Another thing I found galling was receiving emails from companies with no identification of the author of the communication. Usually combined with that is no direct telephone line (or email address) to contact the person involved but a generic 1300 style number – which might be fine if one has half a day to waste waiting to be answered, answering "privacy" questions and being redirected from person to person.

This is common but thankfully not the case across the board.

In fact, a few of the companies have been prompt with their responses and quite reasonable to deal with. Others have been unhelpful to the point of being obstructive, despite having self-serving statements repeated in their written correspondence such as "we are here to help" which are meaningless and largely untrue.

Despite having a signed authority advising that I act, one insurance company attempted to cut me out of the process by communicating directly with my client. Some of the information it was seeking from him was irrelevant and inappropriate.

I am quite sure that the superannuation and insurance industries have improved some aspects of their operations since the Enquiry, but there is clearly still a long way to go. Communications with members, claimants and their representatives ought to be clear and concise, not obstructive and not filled with irrelevant and generic statements.

In my view, to avoid superannuation funds and insurers reverting back to their old pre-Enquiry ways, there ought to be added to their latest Code of Practice a requirement to provide appropriate, readily assessable contact details for the person representing the superannuation or insurance company. If I can do it, they can do it. These are some of the wealthiest businesses in Australia earning profits from their members, so there is no excuse that they cannot afford the resources.

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