Published 10 Oct 2018
The Royal Banking Commission finished its investigation into financial services in September 2018 after a bruising couple of months for the industry. Major scandals rocked some of the country's biggest banks and wealth management firms, causing serious damage to the reputations of many businesses.
The super industry was already reeling after a damning Productivity Commission report into its conduct and failings earlier in the year. But what other problems did the royal commission uncover during its probe?
Here are the key highlights of the hearings that focused on superannuation life insurance claims:
Total and permanent disability (TPD)
TPD policyholders are among the most likely to have their claim rejected. Insurers turn down approximately one in six claimants, according to the Australian Securities and Investments Commission (ASIC).
The royal commission heard a handful of cases where super funds and insurers used confusing clauses and nefarious techniques to dismiss claims. This included a woman who became a paraplegic after falling from the fifth floor of a building. Her claim was initially rejected, despite paying premiums, because her super fund contained less than $3,000.
Critical illness cover
Also known as trauma insurance, critical illness cover isn't far behind TPD policies in terms of rejected claims. ASIC found 14 per cent of payouts are turned down.
The biggest scandal regarding trauma insurance involved CommInsure, which misled customers by claiming its policies would cover all heart attacks when certain types were excluded. Making matters worse, ASIC allowed the company to make a 'community benefit payment' of $300,000 instead of pursuing up to $8 million in fines for the misconduct.
While ASIC found insurers approve 93 per cent of income protection claims, the royal commission still heard traumatic tales of companies mistreating customers to escape payouts.
The most egregious example involved a nurse who suffered severe work-related anxiety and depression. Insurer TAL dragged its feet on her claim by:
TAL's General Manager of Claims Loraine van Eeden admitted the organisation's behaviour was inappropriate and tantamount to bullying.
Would you like to make a superannuation claim?
The royal commission's public hearings highlighted numerous examples of misconduct in the superannuation industry. ASIC figures show that nine out of 10 life insurance claims are paid, but there are still clearly people who are let down by the system.
If you've had crucial life insurance payments rejected, please contact Gerard Malouf & Partners Superannuation Lawyers to see whether we can help you dispute the decision.