Death and Disability Claims

The claims transformation conversation we need to have

Let's talk about death and disability claims. Not a cheery opener I know, but important to get right.

I recently moderated a panel on this topic at the Future Fund Admin Conference with three guest speakers who have genuinely lived this work – Kerry Vogel (Head of Insurance Claims, Performance and Delivery at CBUS Super Fund) Jocelyn Furlan (Non-executive Director and Chair) and Alison Bodinnar (Insurance and Superannuation Executive). There were quite a few moments that stuck with me.

The good news first: since ASIC's focused work on claims handling, death claim processing times have improved significantly. Alison Bodinnar, who has led group proposition and product at some of Australia's largest insurers, noted that on the insurer side, average processing is now down to one to two business days. Of course, that still leaves the super side, but it's a significant reduction in time taken.

However, for a lot of funds, the response to regulatory pressure has been to add more process, more oversight, more sign-off layers and that is not the same thing as actually fixing the problem.

The nominations mess is entirely self-inflicted

Kerry Vogel, who leads insurance performance and delivery at CBUS, walked through a decision their fund made: scrapping non-binding nominations altogether. One type of nomination, no explanation required, no trying to understand the difference between a suggestion and an instruction.

That move makes so much sense it is almost embarrassing that it isn't standard practice. A non-binding nomination is, in practice, a suggestion that looks like a commitment. Members fill in the form and assume the fund will honour it and most have no idea it doesn't work that way. We've collectively created a system that sets people up to be surprised at the worst possible time.

CBUS is also moving to non-lapsing binding nominations online, without witnesses, later this year. Some people in the room questioned whether that was legally sound, and Kerry's answer, backed by legal advice, is that Regulation 617A of the SIS Regulations only applies to lapsing binding nominations. Non-lapsing nominations operate under different rules and retail funds have offered them this way for years. This isn't a loophole; it's a different legal instrument entirely.

What's been happening is that most trustees have been applying witness requirements that don't apply to non-lapsing nominations, because it felt safer. I understand that instinct completely, but the result is that members easily end up with no binding nomination at all, and their family waits months longer for a payment. That's not risk management, it's protecting the fund at the expense of the member.

Claims staking: a protection that has outlived its purpose

Jocelyn spent nine years at the Superannuation Complaints Tribunal and she made a point about claims staking that I haven't been able to shake. Claims staking was never a legal requirement, it was a trustee protection, designed at a time when there were no modern data systems and non-binding nominations were the primary tool for identifying dependants, and its original purpose was actually to get death benefits paid faster.

What's happened over time is that claims staking has become standard practice across the industry, adding weeks to an already lengthy process, with very few people questioning whether it still needs to be there.

Some funds have already made the decision to drop claims staking for benefits under a certain threshold, and as Jocelyn pointed out, the number of cases where a trustee is required to pay a benefit twice is tiny. For that protection, we're making grieving families wait six weeks longer than they need to.

Her framing on this was worth sitting with: "We take risks in every other area of our operations. We seem to be either emotionally attached, or deeply risk-averse, specifically around death benefits, to the point where we're protecting ourselves at the expense of grieving families."

Technology won't fix a broken claims process. It may accelerate it.

This is where I want to spend the most time, because I think it's where the industry is most at risk of getting it wrong.

Digital lodgement for disability claims is coming, and Kerry is already working with CBUS's insurer to build exactly that capability. It will reduce turnaround times, it's a genuine improvement and it will help members who want to submit documentation without having to navigate phone systems or post mail back and forth. The critical point Kerry made, though, is that it's a channel choice, not a solution, and that tele-claims will always remain available for members who simply need to speak to someone.

The people on the other end of a death or disability claim are often in the most difficult circumstances of their lives, some from regional areas, having never dealt with significant money, suddenly receiving a six-figure payment and needing clear communication, human contact and a system that treats them like a person. Making it possible to lodge online doesn't solve any of that.

What does solve it is fixing the underlying process first, and on that front, the industry has a long way to go.

A specific example came up in the discussion. Alison talked about a case where some claims assessors were using generative AI tools to draft member communications but not reviewing emails before sending them. The unfortunate results included letters referencing doctors who didn’t exist, and emails disputing the existence of documents that were attached to the very email being replied to. Members who receive communications like that, when they're already in a difficult situation, lose trust, engage lawyers and spend money on legal fees that should be going toward their recovery.

That is not a technology problem, it is a training and process problem.

The same principle applies to the complexity that accumulates in claims processes over time. Every exception, every edge case, every "what if" gets added to the if/else flow and then there's an expectation that technology will somehow make it workable, it won't. If the underlying process is a tangle, automating it just moves the tangle faster. Kerry made this point directly: process simplification and communication simplification go hand in hand and the experience of looking at years' worth of member letters and realising they all need rewriting from scratch is a consequence of process complexity accumulating unremarked for years.

What boards want to hear

From Jocelyn's perspective as a board chair, the ask is simple: member outcomes, not efficiency metrics, show the impact on a real member in a real situation.

The example she raised was a member who had been through a difficult disability claim and said, "It's great that you're investing in technology, and yes, I can lodge a claim online, but can you please review the documentation you're sending to members who are going through some of the worst moments of their lives?" That's the brief, it's not complicated, just hard, because it requires fixing the process before reaching for the tool.

Jocelyn also mentioned a real example to demonstrate the importance of recovering from error – she had recently been the chair of a member meeting where a technical glitch meant members couldn’t join. Jocelyn organised for the team to personally call every affected member afterwards to apologise. Most members were delighted to be called, and many commented that they hadn’t expected any follow-up, let alone a personal phone call.

Alison made a similar point: governance has been strengthened and that's good, and there's also a real risk that governance becomes about adding more layers of process rather than genuinely improving outcomes, and the two are not the same thing.

The question I'd leave with you

Your transformation is going to go wrong somewhere, even if only for a small number of members, and the question worth asking now is what your response looks like for the one member you absolutely don't want it to go wrong for.

The ASIC focus created urgency and that urgency is largely being met with governance uplift and digital infrastructure. Both are valuable and neither is sufficient.

The real work is the harder stuff: the letters that need rewriting from scratch, the underlying process that needs simplifying before it goes online, the claims staking review that requires a trustee to consciously accept a small and quantifiable risk to stop making families wait. That's not a technology project, it's a design problem.

What are you seeing at your fund? I'd genuinely like to know.