The purpose of life insurance is to provide financial security and peace of mind to those we protect, when they need it most. However, our analysis shows that members covered under group insurance wait on average two years after falling ill or suffering an injury to notify us of their claim.

Needless to say, this delay limits our ability to provide timely assistance by supporting a member to return to work or by getting financial support into the member’s hands as soon as possible. That is why we launched a study aiming to answer two key questions:

  • why do these members wait so long to claim? and
  • what can we do to reduce the delay?

We believe this research merits an industry-wide effort to reduce claim notification delays. We are already working on a few initiatives, from new methods of engagement to predictive data modelling. But we can’t do it alone – this issue cuts across health, government, insurance and superannuation funds. Our overriding aim must be to make it as easy as possible to get the benefits of insurance in the hands of those who need it, when they need it.

Testing industry assumptions

When we set out, many people across the industry agreed on the likely cause of the delay: superannuation fund members are broadly disengaged and unaware of insurance in superannuation. We had some other ideas, too:

  1. certain product names, such as “total and permanent disability,” may be a deterrent,
  2. other sources of income are front of mind – such as Centrelink or workers’ compensation.

But it’s not good enough to have a theory without testing it. And when it comes to member behaviour, it needs to be tested with a broad range of people across demographics, conditions and cover types.

Working with our superannuation fund partners, we began reaching out to hundreds of successful claimants. While our research is on-going, we have surveyed 148 members so far and it has quickly become clear that a total lack of awareness is not a major driver.

In fact, the vast majority of people were aware they had some form of insurance from the start – only 5 per cent were totally unaware of their cover, and 4 per cent had forgotten about it. Given the industry commentary around disengaged members, we found this very surprising.

That said, there is clearly a lack of understanding when it comes to the specifics: 25 per cent were not aware they had a suitable policy. Yet a much larger portion of people – 47 per cent of respondents – were simply not in the right frame of mind (including facing up to a reality they may never work again), and 33 per cent had other priorities (like focusing on their recovery).

Claimants are patients first

This came to form our first and most powerful insight: before claiming, each person’s priority is to deal with the immediate consequences of a serious accident or illness. The fall-out reaches across their long-term health, family relationships and working lives, and naturally leads them to similar questions:

  1. How will my health and physical ability change in the coming months and years?
  2. Will I be able to return to work?
  3. Will I be able to return to my “normal” life?

In the meantime, 65 per cent of our survey respondents relied on sick leave or annual leave, and 61 per cent tapped into their savings to fund living expenses. While most don’t regret delaying their claim, they do acknowledge it has had an effect on their finances and health.

Meet members where they are

Clearly there is an opportunity for those of us looking after members’ financial security to play a more active role. But rather than each of us simply launching our own engagement initiatives, we can do more to leverage existing opportunities and meet members where they are.

It is particularly revealing to look at the people and organisations that members naturally look to for advice. More often than not, the most significant influencers are doctors, families and friends.

Healthcare professionals obviously play an important role – 81 per cent of claimants received advice from one prior to starting the claim process, but only 11 per cent of these interactions sparked the insurance claim.

In a similar vein, most claimants have discussions with their employers when they need support in making claims. This is typically later in the process, even though HR teams are often the first to find out about the event leading to the claim.

In partnership with superannuation funds, employers, and workers’ compensation providers, our first opportunity will be to make it easier for all key influencers to give members high-value information about insurance in super, when appropriate.

We are consulting our Medical Specialist Advisory Board on the question, and reaching out to healthcare organisations, employers and workers’ compensation providers, starting dialogues and creating initiatives to figure out what will be most effective.

Finding those in need

Another fruitful avenue will be predictive modelling. Funds and other organisations, such as Centrelink, the National Disability Insurance Scheme and workers’ compensation insurers, have access to high quality data and information that could tell us whether a member is likely to make a claim. In fact the existing ATO SuperStream data standards include optional fields that would prove extremely useful if they were made compulsory.

Using this data responsibly and properly while working with superannuation funds, we may find opportunities to intervene sooner by proactively contacting the member in question, cutting the notification delay and generating a more positive outcome.

Indeed, our research revealed that members are happy to be contacted three to four times a year if the content is timely and relevant.

In the coming months, we will be working to finalise our research and test some of these initiatives. While it will undoubtedly take time for these changes to make themselves felt, we feel this is an issue best solved by bringing all parties to the table to agree on an industry-wide response and fully deliver on the promise life insurance holds.

We look forward to updating everyone as the research is concluded and our initiatives enter pilot in the coming months, and we welcome any thoughts, questions or engagement opportunities in the meantime.

Jenny Oliver is general manager of group insurance at TAL, and Darren Wickham is general manager – group life product & pricing, investments and retirement incomes at TAL.