Research shows super funds pay out on majority of TPD claims

Published 31 Mar 2017

Super funds regularly pay out on total and permanent disability (TPD) claims, with nearly one-third boasting between 91 and 100 per cent approval rates.

Recent figures from independent research firm SuperRatings found that nearly half of surveyed funds made full or partial payments on between 71 and 90 per cent of claims over a 12-month period.

The data, published in the Australian Financial Review, didn't reveal the proportion of claims that were rejected outright, but just over 10 per cent of plaintiffs received less than 60 per cent of their compensation amount.

Adam Gee, SuperRatings chief executive, said the statistics suggested that super funds do have their members' best interests at heart.

"As with any industry, there are some funds that do not always do the right thing and this has fuelled much of the media attention," he stated.

"We believe a small number of funds do not maintain enough internal oversight over insurance claims and often rely too heavily on their insurer to make decisions about the payment of claims."

However, according to Mr Gee, these funds are in the minority and should not be considered indicative of a wider industry trend.

ASIC report into TPDs

Mr Gee's comments followed an October 2016 Australian Securities and Investments Commission (ASIC) review of TPD cover in the country.

The organisation revealed that TPD claims had the highest rejection rates in Australia at 16 per cent. Trauma insurance followed closely behind with 14 per cent declined on average.

Meanwhile, the ASIC report found income protection policies were among the most likely to be paid life insurance products - only 7 per cent of claims were rejected.

This finding was echoed in the SuperRatings research, with nearly half of super funds paying out between 91 and 100 per cent of income protection cases. A further 25.7 per cent accepted between 81 and 90 per cent of claims.

Nevertheless, there were less favourable results in the research. Three per cent of funds only paid between 21 and 30 per cent of TPD claimants, while another 3 per cent accepted only 31 to 40 per cent of cases.

"We believe that the main reasons for this are very tight terms and conditions within their insurance policies, limiting the eligibility of members to claim, as well as an over-reliance on the insurer's decision, rather than any internal oversight of the claims process to question why a claim was denied," said Mr Gee.

Have you been rejected for a TPD claim? Please speak to a member of our team at Gerard Malouf & Partners Superannuation Lawyers.

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