ASIC's allegations suggest that United Super did not manage these claims in a manner that was efficient, honest, and fair. Additionally, the trustee is under scrutiny for failing to report a "reportable situation" within 30 days, as mandated by the breach reporting requirements.
The civil penalty proceedings were launched in the Federal Court, bringing to light United Super's alleged failure to handle over 10,000 death and total and permanent disability claims promptly since September 2022. The claims reportedly took more than 90 days to process, causing frustration among Cbus members and claimants.
(The information source is from a report in insuranceNEWS.com.au)
One significant aspect of ASIC's allegations is United Super's failure to address delays and reports from Australian Administration Services, which oversees the claims processing. As per Cbus, the financial impact of these delays is estimated to be $20 million.
In light of the 2022 amendments to the Corporations Act, ASIC licensees are required to ensure that claims handling and settling services are provided with efficiency, honesty, and fairness. This legal action against Cbus is anticipated to set a precedent in the broader insurance landscape.
McCabes principal Mathew Kaley remarked on the implications for general insurers, noting, "Claims handling for general insurance is very much in focus, especially pertaining to catastrophe claims. The significance of this case for general insurers is that ASIC, as expected, is showing it will take enforcement action where it thinks an insurer is falling below the standard required for claims handling."
Kaley further emphasized the need for responsive action when issues arise, pointing out that, "In this case, the evidence suggests that the claim delays were not addressed very quickly."
In response, Cbus affirms its dedication to reducing claim processing delays by implementing improvement measures and establishing a compensation scheme for those affected. "Cbus has been co-operating with ASIC during its investigation and notes that ASIC has ... commenced proceedings in the Federal Court," stated a representative from Cbus. The fund also expressed its intention to invite ASIC to explore alternative dispute resolution to circumvent prolonged litigation.
