This article arises from our deep frustration with Fund Administrators and our firsthand experiences of their service. In the insurance world, there is a persistent perception that insurers go to great lengths to deny claims. While the Royal Commission exposed some troubling instances of poor claims handling, we can confidently attest, based on our careers, that the insurers we worked with did not prioritise denying claims.
In our opinion, a key factor contributing to customer dissatisfaction is the role of Fund Administrators. Many of these administrators are external organisations contracted by Superannuation Funds to manage key processes. They often operate independently of the Fund’s culture and values, and while they are expected to align with the Fund’s standards, this alignment frequently falls short. Instead of reflecting the member-centric principles that Superannuation Funds strive to promote, these administrators rely on rigid, process-driven approaches that alienate and frustrate customers. This disconnect exacerbates the already challenging claims experience, leaving customers caught in a system that prioritises procedure over genuine service.
The Royal Commission made several recommendations to improve claims handling, including addressing "withdrawn" claims—claims received by an insurer but later abandoned by the customer, often due to the perceived complexity of the process. However, this focus on withdrawn claims overlooks a critical issue: the role of Fund Administrators. In our view, their poor service—or lack thereof—is a significant reason customers give up before even proceeding with a claim.
The Roadblock of Fund Administrators
Our observations have revealed that Fund Administrators can be significant roadblocks in the claims process. They contribute to customers' frustration and eventual decision to abandon their claims. Unlike insurers, who are required to report on withdrawn claims, there is no similar reporting requirement for Fund Administrators. This lack of accountability means there's no measure of how many potential claims are not submitted to the insurer because of negative interactions with Fund Administrators.
We have received anecdotal feedback from our clients who initially didn’t proceed with claims because their interaction with the Fund Administrator was discouraging. They were informed that their illness or injury was not work-related, not severe enough, or not covered under the policy. They were overwhelmed that they abandoned the process and then a couple of years later have engaged Simplify My Claim and decided to try again. While these are anecdotal and not verifiable, our experiences with administrators for our clients' claims have shown us just how poor this critical frontline service can be, contributing to people giving up and not proceeding.
We previously shared Bens Story where a Fund Administrator incorrectly told a customer he had cover. A statement that he relied on, thinking he had financial protection. It wasn’t until our engagement six months later that we were advised this was incorrect, and he didn’t have cover. There is currently a complaint lodged with AFCA regarding this. Unfortunately, since then we have consistently witnessed poor service regardless of the Superannuation Fund we are dealing with.
Across most Funds, workloads appear to be large and service standards are not being met. Some Funds even advise this on their telephone recordings and website. We see clear indications where staff are inadequately trained or where the process is rigid, with no flexibility to cater to customers' unique situations. The interaction with Fund Administrators is often treated as a procedural process, which works well for managing core responsibilities in the superannuation sector. However, this approach is inadequate on the insurance side, particularly when dealing with unwell and often vulnerable customers.
The driver for this article has been many frustrating interactions, however two recent examples where we have been appalled by the service provided, highlighting the importance of our business. If our clients had to deal with the Administrators directly, they would have just given up and walked away.
Case Study 1: Password Predicament
In one case, we recently lodged documentation with a Fund and called 10 business days later to check the status. All up we spent 1.5 hours on the phone. This process required that if there was a password on the account, the Third-Party Authority holder needed to have that password as well. In our opinion this is a complete breach and invasion of privacy for the Fund’s Members to have to share their unique password on top of providing a signed Third-Party Authority form. Having to share passwords, which are likely associated with other passwords they may have with financial institutions or logins.
Our client, who had suffered a stroke, had to share five potential passwords with us because she couldn't recall the exact one due to her cognitive difficulties. Each time a password was incorrect, we had to call back and try the next one. The process did not allow the agent to retry the next password during the same call. Instead, we had to hang up, dial again, and wait in the queue to restart the entire security check. This procedure was not only frustrating but also raised serious concerns about security and privacy. While we are generally advised never to share our passwords with others, this Fund requires it. When we asked what would happen if she couldn’t recall her password, we were advised she would need to send a letter with certified identification to change it. This process is unnecessarily burdensome and outdated. If you are going to have passwords in place, at least invest in technology where there are abilities to reset this online.
Case Study 2: Delayed Documentation
In another example with a different Fund, we have spent weeks trying to obtain basic information such as Policy Documents, benefit amounts and claim requirements. Despite excessive delays, the individuals responsible for providing the information are never available to discuss, hiding behind frontline call centre staff. We receive emails outside of core business hours, which, while supporting flexible working arrangements, do not help in servicing customers during core business hours.
When we finally received the Policy Documents, they were incomplete and missing relevant endorsements that applied to our client. This not only caused further delays but also significant frustration and uncertainty. We have no confidence that the information provided is accurate or complete, making it extremely difficult to support our client effectively. The lack of reliable information undermines our ability to provide the necessary guidance and assistance, highlighting a severe deficiency in the service provided by the Fund Administrator, as well as in their training. At the time of writing this article we have still not been provided the benefit amount; we have received 2 versions of the benefit amount that do not make sense however not an actual calculation as to what the benefit is. Despite spending in total nearly 4 hours on the phone on numerous calls, an apparent escalation on the case, we are still awaiting this basic detail.
The claim is not yet lodged with the insurer. However, based on our experience with the Fund Administrator, we are expecting the worst. We anticipate a combative process delivered with inefficiency and poor service, which is unfair to the insurer, but this is the impression created by our frontline experience.
The Larger Issue: Accountability & Empathy
The role of Fund Administrators in the claims process is critical. Their actions can significantly impact whether customers proceed with their claims. It's essential to address this issue and ensure that Fund Administrators are held to the same standards of accountability as insurers. By doing so, more customers can navigate the claims process successfully and receive the benefits they are entitled to.
From what we can see in Fund Annual Reports, the claims statics that are shared are in fact insurer claim statistics around number of claims paid, dollar value of the claims, acceptance rates and times to decision. Some share Net Promoter Score statistics however, we can’t find any core statistics on their Fund Administrator insurance transaction, including details of claim notifications that haven’t been proceeded with and the reasons for that. This gap in our opinion means there is insufficient accountability for the initial stages of the claims process, where many customers are discouraged from proceeding due to poor service and perceived complexity.
Conclusion: A Call for Change
Navigating the claim process is emotionally draining, especially for vulnerable customers. Excessive wait time, rigid processes, poor training, and a complete absence of empathy are unacceptable. While Simplify My Claim shields our clients from these hurdles, many others face them alone and understandably give up.
The difficulties with the service provided by Administrators on the insurance aspects is not new but, in our opinion, it still hasn’t been resolved. Funds should consider incorporating Claims Advocates like Simplify My Claim into their service models to ensure that members do not have to face these hurdles, especially when they are unwell. By addressing the gaps in Fund Administrator performance, we can ensure customers are supported from the start, rather than being deterred by a system that should be working for them.
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Email: helpme@katiem141.sg-host.com