Lawyer Victoria
Lawyers and insurers

Lawyers and insurers

22 December 2016

In the last edition, I noted in passing the various forms of advertising by the insurance and superannuation industry exhorting its members not to waste money using a lawyer for total and permanent disability (TPD) claims.

This was galling enough, given the revelations with respect to the tactics ofComminsure, among others.

It gets worse.

The Australian Securities and Investments Commission (ASIC) has appeared before a federal parliamentary committee, having just released a review of the life insurance sector and its handling of claims. According to its press release, ASIC's review covered more than 90 per cent of that
insurance market.

ASIC told the committee that three insurers are declining between 24 per cent and 37 per cent ofTPD claims. Even more worrying, at least two insurers admitted that they paid claims management staff incentives to deny claims.

Of course, such denials and delays cause enormous distress to vulnerable clients and their families, not to mention the increasing use of surveillance and other potential invasions of privacy in the processing of claims.

The numbers are staggering. The superannuation sector is worth $2.3 trillion and the business of selling life insurance products to super fund members is worth $6 billion.

For the insurance and super industry to suggest to its members that they are wasting money on lawyers is farcical.

The industry would do better to liaise and engage with legal stakeholders to improve claims processing, methods of dispute resolution and ultimately delivery of the insurance.

ASIC highlights the need for raising claims-handling standards,  strengthening dispute resolution processes and public reporting.

As has been said elsewhere, banks have a culture of paying incentives to sell the insurance products, while the insurers have a culture of paying incentives to decline claims on those products.

This conduct has continued despite the House of Representatives Banking Inquiry and the tide of regret and apology that followed.

Not surprisingly, the insurance sector did not give its consent for ASIC to publicly release the names of any of the insurers engaged in these activities to the parliamentary committee.

ALA has long argued for a proper code of practice for the industry, which cannot come fast enough. Meanwhile, at the heart of the present dispute between the Attorney-General, George Brandis, and the Solicitor-General, Justin Gleeson, lies the recent direction by the Attorney-General that all requests for legal advice from the Solicitor-General must be made
through the A-G's office.

The Attorney-General submits that this is nothing more than an administrative step. to enable his office to act as something akin to a gatekeeper. I am not aware that the Solicitor-General was looking for such a triage service. The Solicitor-General must be able to act independently. It is not appropriate for the Attorney-General or anyone else to demand a right to monitor access to the Solicitor-General.

George Brandis has said that he cannot foresee circumstances where a request for the Solicitor's advice would be refused - why, then, has this direction been imposed?

Certainly it is disheartening to observe the country's two most senior lawyers embattled over this 'legally binding directive: while a number of legal experts have spoken out against it.

The independence of the Solicitor-General to provide legal advice free of fear or qualification should be without any potential political interference, whether real or perceived. It is easy to imagine how any advice sought on controversial issues such as marriage equality, anti-terror laws or indefinite detention could provoke intense political interest.

Finally, I end on a sad note for us all, and in particular lawyers. I refer to the tragedy that unfolded a few weeks ago in Pakistan where at least 70 people, mostly lawyers, were killed by a bomb, while gathered at a hospital mourning the death of a colleague, who had earlier that day been shot dead by two gunmen.

Both events were later claimed to be the actions of terrorists who were especially targeting lawyers.

On behalf of ALA and all our members, I send our most sincere condolences and thoughts to the families and friends of those killed and a message of support to all our legal colleagues in Pakistan.

By Tony Kenyon
03 8657 8888