Claim disputes: three verdicts

7 min read
7 min read

Case 1:

The member had no death cover when the trustee introduced automatic default cover. If members didn’t want cover, they had to take active steps to opt out. The member did not opt out and he also had no cover when he died. His wife complained to the Tribunal.

Under the terms of the policy, the deceased member had to be in ‘Active Employment’ on the date the default cover was introduced in March 2013. It was not in dispute that, at this date, the deceased was neither working nor capable of working 35 hours a week as he was undertaking treatment for aggressive Hodgkin’s lymphoma. This illness eventually caused his death in July 2014.

The policy provided ‘New Events Cover’ if the member was not in ‘Active Employment’ when the cover commenced. This type of cover was restricted to an illness that first became apparent after the commencement of insurance. Here, the member’s illness pre-dated the commencement of insurance and it was, on this basis, that the insurer denied the wife’s claim for payment. These facts were not in dispute. The wife’s complaint really centred around her deceased husband being deceived or misled by the trustee about the terms underpinning the default death cover.

A significant event notice explaining the default insurance was sent to the deceased in December 2012 but, at this time, he was convalescing from his first bone marrow graft. It was, therefore, quite possible he never focused on the information contained in the notice. Importantly, the notice did clearly and adequately describe the policy terms, including that if he never returned to active employment for 30 consecutive days, the new events restriction would apply indefinitely. After this initial communication, the deceased member received statements that indicated he had insured death cover of a specified dollar amount. It appears that it was these statements that the member and his wife focused on, not the earlier significant event notice that explained the insurance and how it worked.

The Tribunal held that the significant event notice did clearly explain how the default insurance cover was to work when introduced in March 2013, and it noted that this was tacitly acknowledged by the wife when she advised her husband was too ill, at that time, to review the notice. While this was unfortunate it did not provide a basis for determining the trustee had failed to properly inform the deceased member. It therefore followed that the trustee had acted fairly and reasonably in denying the wife’s claim for compensation.

D17-18177

Case 2:

The trustee decided to not compensate the member who was claiming compensation arising from a family law split actioned in 2016. Was that decision fair and reasonable?

The member’s former wife served on the trustee a draft Family Court order in October 2009 seeking the trustee’s consent to a family law split between the former wife and the member. This draft order caused the trustee to insert an administrative cautionary flag on the member’s account.

A final sealed Family Court order was not served on the trustee until March 2016. Both the final and draft orders provided the member’s account balance be split 55 per cent to the former wife. The issue was that in 2009 the member’s account balance was significantly less than it was in 2016. This was caused, in part, by the account continuing to receive employer contributions in the intervening years.

The trustee actioned the final order based on the account balance in 2016. The resolution sought by the member was for the trustee to compensate him in the amount that was the difference between the 2009 and 2016 account balances, approximately $39,050.

The trustee pointed out to the Tribunal that the final Family Court order in 2016 contained all the relevant information and it was legally bound to follow that order. There is simply no discretion granted to the trustee under the Family Law Act 1975.

The Tribunal noted that until the trustee was served with the final order, it was not legally entitled to complete the family law split. Further, the trustee was under no legal obligation to follow up with the member, or his former wife, to determine if the draft order had become the final order. Fundamentally, that was the responsibility of the member and his former wife (and/or their respective legal advisors).

As the trustee had paid the correct amount to the former wife in accordance with the final court order, the Tribunal agreed that the trustee was correct in deciding to not compensate the member. The decision was fair and reasonable.

D17-18176

Case 3:

In March 2014, the member was made redundant after a decade with the same employer, a finance firm, where he was the chief operating officer. The member had a bachelor of economics, a diploma in financial planning and a certificate in mortgage broking. While he was looking for new employment, he did not work again until he commenced his own mortgage broking business in September 2015.

By early February 2016, the member’s doctor diagnosed him with adjustment disorder with anxiety and depression and this caused him to cease work altogether. The member then claimed under his superannuation income protection policy. However, notwithstanding the member had received seven statements from the trustee advising he had insurance cover, the claim was denied on the grounds the policy had ceased six months after he was made redundant. The benefit in dispute was $16,500 per month for a two year period.

The member argued he was never advised the cover had ceased. The trustee disputed this and pointed out to the Tribunal that in July 2014 the trustee wrote to the member advising him that he would be transferred to the fund’s personal division having ceased employment with his employer. That communication indicated insurance cover would continue so long as his account balance exceeded $2000 and ‘subject to relevant terms and conditions’.

In March 2015, the trustee wrote to the member explaining the transfer was completed and this communication stated:

“In the event of an income protection insurance claim, you will be required to provide proof of your salary and permanent employment status. To meet the permanent employment requirement, you must have been working a minimum of 15 hours per week. If you are not currently working 15 hours per week, or if your salary has reduced, please advise us at your earliest convenience.”

The trustee also pointed out to the Tribunal that it had no way of knowing the member was not employed for over six months as it only became aware of this fact when the claim was being made. The Tribunal held that it was satisfied that ceasing employment with the employer did not equate to the member being unemployed. In fact, the trustee had no way of knowing this unless the member notified it of the fact. The Tribunal also held that the trustee had provided the member with adequate information, although it could have been clearer about where to access the ‘relevant terms and conditions’ in its July 2014 letter. The March letter welcoming him to the personal division also included a PDS and contact details. This package of information adequately advised him when income protection cover ceased. Accordingly, the Tribunal was satisfied that had the member followed the instructions to contact the trustee if he was working less than 15 hours a week, he would have known his income protection cover had ceased. The trustee’s and insurer’s decision to deny the claim was, therefore, fair and reasonable.

D17-18174

Picture of By Clayton Utz

By Clayton Utz

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Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

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Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.