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Insurer changes TPD definition in Australia

Written by:
Melissa O'Neill
National Practice Leader | Superannuation & Disability Claims, Special Counsel

Australia’s largest and most recognisable industry superannuation fund, AustralianSuper, has agreed to allow TAL to unilaterally alter the definition for Total and Permanent Disability (TPD) insurance to make it significantly more difficult for members to claim this benefit – a benefit for which they pay premiums from their own superannuation account.

Most superannuation funds provide their members with TPD insurance they can access if, for any medical reason, they are unable to continue working in a job for which they have education training and experience.

As of 1 November 2014, the new definition of TPD for the 2 million plus members of AustralianSuper will now require an assessment not only of whether their medical condition prevents them working in a job within their education training and experience, but also whether, in TAL’s opinion, that member is able to reasonably retrain or reskill despite their injury or illness.

If TAL forms a view that a person with an illness or personal injury can’t do their old job, but can retrain for another job with which their injury or illness does not interfere, then a benefit will not be payable. This is despite a person being unable to return to the type of work that they have been doing in the past, often doing for many years, and sometimes even exclusively.

Shine Lawyers solicitor Melissa O’Neill has more than 10 years' of claims and litigation experience in this space and says she is extremely concerned about how the change with impact everyday Australians. Ms O'Neill expresses concerns that many other insurers and superannuation funds will follow AustralianSuper down a similar path.

“These changes will make it significantly more difficult for injured AustralianSuper members to access insurance benefits when they are most in need,” Ms O'Neill said.

“Typically, we see manual, low and semi-skilled workers who rely on this type of insurance as it has the benefit of being good value for money, and does not impact on a family’s cash flow – that is a good way to protect a family for these workers on low wages," she said.

“These type of workers are doing that work for a reason – they may not be academically minded, or may not have an inclination to work in an office or retail environment.

To expect these workers to reskill into a role completely at odds with their interests and skill set takes away a person’s right to choose their own career path.

In recent years, insurance companies have likely seen a growth in claims as more and more people have become aware of their insurance benefits and rights.

It appears that they have been unprepared for this and are now declining legitimate claims in an attempt to protect their profit margins.

In my view this latest development is simply an attempt by insurance companies to curb the payouts being made through legitimate claims by using its corporate presence to bully the little guy."

Ms O’Neill says what is most concerning about this change in policy definition is the lack of clarity around when this assessment about a worker’s ability to get alternative work will be made.

“Will TAL simply draw out the claims process in the hope that a claimant will eventually get a job, even if it take 3, 4 or even 5 years, just so it does not have to pay? Such a claims process would mean the whole purpose of the insurance would be defunct.

TAL and Australian Super have failed to offer their customers any reassurance or safeguards in this regard."

Ms O’Neill says that this new definition now requires workers to show that they are so badly off that they simply cannot undertake any work at all.

“I have no doubt that insurers will trot out the old line that anyone can get work as a telemarketer or as a delivery driver – because everyone who can use a phone, or has a driver’s licence is able to do this work," she said.

"It also increases the cost for a claimant in obtaining the appropriate and necessary medical and occupational evidence to prove their case.  In some instances this can cost a claimant in the vicinity of $5,000.  I believe that some claimants will simply forego making a claim as it is all too hard and expensive, and I suspect this plays into TAL’s strategy to reduce their own claims costs."

Ms O’Neill says she is concerned about what choices had been given to AustraliaSuper members about the significant tightening up of the TPD definition.

“I would be interested to see what notice AustralianSuper gave to its members about what the changes really mean, and whether this has allowed their members to really consider the type of insurance that they want and need," she said.

"It certainly is not displayed on their website, and from what I can see, it has not been announced in their daily news & blogs.

The way in which this change has been snuck past members is shameful. Members of AustralianSuper should be showing their displeasure by seeking advice and getting alternative insurance elsewhere."

Written by Melissa O'Neill

Written by Melissa O'Neill. Last modified: October 16, 2018.

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