TPD insurance claims – are lawyers needed?
The answer to this question will largely depend on who you ask. The superannuation and life insurance industry will undoubtedly argue that lawyers are not required.
In fact, many large industry superannuation funds actively advertise on their websites that legal representation is not required.
Australian law imposes strict covenants upon superannuation funds to actively pursue genuine claims on behalf of their members. Practically, this means that if a superannuation fund is presented with a case that on the face of it looks genuine and has reasonable prospects of success, then they must actively pursue it on behalf of the member. Essentially, the system was somewhat regulated to exclude the need for lawyers to get involved.
The issue with this is that often the superannuation fund rules will defer the decision making process about TPD to the group life insurance company, which is then ultimately ratified by the super fund trustee. So, if a life insurer decides to deny a claim, the superannuation fund will more often than not agree with this decision. In short, the law that was put in place by parliament to protect consumers, is not always adhered to by superannuation fund trustees. As a result, people are often forced to seek legal representation due to this legal requirement not always being followed.
In 2016, the life insurance sector was placed under intense scrutiny as a result of a joint investigation by Four Corners and Fairfax Media. The exposé highlighted the severe injustice Mr A received from his superannuation fund. Mr A was a high performing employee of the Commonwealth Bank of Australia. As part of his employment, he was a member of a Commonwealth Bank Superannuation Fund, which purchased group life insurance on his behalf through another related Commonwealth Bank entity.
Mr A suffered a severe psychiatric illness that resulted in the Commonwealth Bank dismissing him on medical grounds declaring that he was totally unemployable. This decision to medically dismiss Mr A was signed off by the bank’s chief medical officer at the time.
So, when Mr A went to make his claim for TPD through his Commonwealth Bank superannuation fund, it should have been straight forward, right?
Unfortunately, the TPD claim process wasn't made simple for Mr A.
Mr A’s case should have been simple and straightforward and lawyers definitely weren’t needed other than with assistance with paperwork, if required. Unfortunately, the bank denied Mr A’s claim at first instance citing that he could work in alternative employment. The very same organisation that medically retired Mr A from all forms of employment then decided to deny his TPD claim. When Mr A sought legal representation, I was puzzled why his claim was denied. After some lengthy legal and practical argument, Mr A's claim was accepted.
William Barsby is a partner and practice manager of the superannuation insurance litigation department for Shine Lawyers
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