ASIC TPD insurance report puts the spotlight on ADL definitions

18 October 2019
Insurance lawyers have today welcomed an ASIC report into TPD insurance and the claims handling process, saying the report had identified key issues for reform, including harsh and unfair definition terms.

Maurice Blackburn Superannuation and Insurance Principal Josh Mennen said ASIC’s singling out of ‘activities of daily living’ (ADLs) definitions as being too narrow was welcome, saying for too long ADL definitions had limited people’s ability to make claims when they were no longer able to work due to injury or illness.

“ASIC is spot on in its assessment today about ADL definitions – these definitions are unfair and see people only being able to claim in the most extreme of circumstances, despite being clearly unable to ever work again due to their injury or illness,” Mr Mennen said.

“Such harsh definitions are particularly unfair given claimants in these situations have paid premiums for TPD cover – cover that for the vast majority forced to deal with an ADL definition will remain out of their reach, irrespective of the impacts of their injuries.

“ADL definitions have no place in modern TPD insurance products, and it is well past time for insurers to abandon these definitions in line with a fairer and more decent approach for claimants,” he said.

Mr Mennen said default insurance within super continued to play a crucial role in providing insurance cover for the vast majority of Australians, but it was important to ensure that insurance products met the needs of claimants.

“Default insurance within super is an indispensable safety net for millions of Australians, and there are many TPD insurance products that do a good job in ensuring claimants get proper access to redress when they need it,” Mr Mennen said.

“However, there are also a number of products that are still not getting this right, including those relying on ADL definitions or products such as SunSuper’s TPD Assist that do not provide fair outcomes for claimants.

“Claimants pay premiums for this insurance, and it is vital that this genuinely can meet their needs in the event they are no longer able to work because of illness or injury.  

“This is also important because TPD claims can be stressful and complex, something that is exacerbated by harsh claims assessment tactics.

“As today’s ASIC report makes clear, delays where a claim is subject to re-insurance are also substantial, with the data showing claims involving re-insurers taking more than double the time of claims where no re-insurer is involved.

“The Federal Government is currently looking at the issue of standard definitions with respect to TPD insurance and we would urge them to take on board the findings from ASIC today in ensuring that all such insurance products can genuinely meet the needs of claimants.

“Finally, while it is pleasing that ASIC’s data collection practices have improved significantly in recent years, there are still gaps and inconsistencies in the information available to claimants when it comes to the performance of insurers.

“As today’s report makes clear, despite the scrutiny on the industry there is still considerable variance in insurer performance and claim acceptance numbers, with Westpac and Asteron being particularly problematic.

“The more data bodies such as ASIC and others can be making available to claimants about the issues the better,” he said.

Media inquiries: Jade Knight at Maurice Blackburn on 0417 969 438