IN RESPONSE to ASIC’s report ‘Holes in the safety net: A review of TPD insurance claims’, based on claims data and files dating back from 2016/17, the Financial Services Council (FSC) today offered more recent analysis, using 2018 data on total and permanent disability (TPD) claims in life insurance.

FSC CEO Sally Loane said the regulator has relied on 2016/17 data, and the report fails to highlight the significant positive reforms the industry has initiated since then, including the introduction of the Life Insurance Code of Practice and the world-class FSC/KPMG claims data initiative.

“The 2018 data tells a very different story and ASIC’s report serves to highlight the substantial progress the life insurance industry has made in the last couple of years. KPMG on behalf of the FSC collect TPD claims data every six months and we know this data collection initiative is unsurpassed anywhere else in the world, both for its granularity and timeliness,” Ms Loane said.

“Data to the end of 2018 shows 88 percent of TPD claims are paid in the first instance and higher at 91 percent for mental health TPD claims. This includes claims against all definitions, including activities of daily living (ADLs), an initiative from the international medical community.

“FSC data for 2018 assessed a total of 11,427 TPD claims, of which 11,008 were assessed against an occupational definition, and only 419 or 3.6 percent were assessed using either a non-occupational or ADL definition," Ms Loane said.

“What this shows is that non-occupational definitions such as ADLs are almost always used as part of a hierarchy of definitions in group insurance in super. ADLs then only apply in the tiny proportion of TPD claims where a definition higher up the hierarchy can’t be used. This can be because, for example, the person isn’t in paid employment so a more generous occupational definition has no relevance.

“TPD claims are significantly more complex to assess than other life insurance claims because they require a judgment as to whether or not the person is expected to work ever again. Given this, all life insurers are committed to ensuring at peak times of vulnerability, Australians feel safe and supported, without financial stress.

“APRA data for 2018 shows life insurers paid out more than $2.2 billion in TPD claims to 14,772 Australians who are not expected to be able to work ever again – providing an average lump sum of more than $148,000,” Ms Loane said.

Subsequent to ASIC’s review, the Life Insurance Code of Practice (the Code) now provides additional consumer protections at claim interviews and for surveillance to ensure claims are not withdrawn for inappropriate reasons.

Since the introduction of the Code, data from the Life Code Compliance Committee shows 92 percent of all lump sum claims in the year to June 30, 2018 were paid out promptly within the Code timeframes.

The Hayne Royal Commission noted that since its introduction, the Code has resulted in significantly improved outcomes for consumers in a number of areas, including how claims are managed. Work is currently underway to further improve the Code.

Ms Loane said, “The FSC with KPMG will continue to gather and analyse even more granular up-to-date data which will help inform better products and services for life insurers, and also policy development to ensure excellent customer outcomes.

“It is also important to note that group life insurance through superannuation offers better value for money than any other type of insurance offered anywhere else in the world. With more than 80 cents paid out in claims for every dollar paid in premiums,” Ms Loane said.

“Even though data is a good historical way of looking at claims outcomes, when it comes to assessing claims, each one is unique and must be assessed on the individual circumstances. If a person is dissatisfied with the outcome, they are encouraged to lodge an appeal with the Australian Financial Complaints Authority.”

 

About the Financial Services Council

The Financial Services Council (FSC) has more than 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing $3 trillion on behalf of more than 15.6 million Australians. The FSC promotes best practice for the financial services industry by setting mandatory Standards for its members and providing Guidance Notes to assist in operational efficiency. The FSC’s mission is to protect and enhance confidence in a strong, sustainable financial services sector that serves Australians with integrity.

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell said advisory boards were increasingly playing a key role in Australia’s small business success stories.

Speaking at the Global Thought Leadership Summit in Melbourne today, Ms Carnell said 74 percent of businesses that use advisory boards want assistance with their growth strategy.

“Advisory boards are a secret weapon in the growing small business’ arsenal,” Ms Carnell said.

“While the small business owner is often flat-out with the day-to-day running of the business, advisory boards are able to realise the SME’s potential by working on the business, not in it.

“They help set a clear plan forward and help the small business owner focus on growth rather than getting distracted while putting out spot fires.

“Advisory boards have seen considerable growth in Australia in the past couple of years, but many SMEs continue to consider themselves too small or not successful enough to engage an advisory board.

“The benefits of advisory boards have been measured in other parts of the world.

“The Business Development Bank of Canada (BDC) surveyed over 4,000 businesses across the country and found sales grew by 66 percent on average in the first three years after setting up an advisory board.

“The BDC survey found annual sales for businesses with an advisory board were 24 percent higher than those without one," Ms Carnell said.

“Advisory boards can also be particularly useful in succession planning, which we know is a significant issue for Australian family businesses.

“Importantly advisory boards don’t need to be a huge cost or time consuming for the small business owner. You can arrange to pay a meeting attendance fee and meet every two-to-three months.”

More information about advisory boards can be found here.

www.asbfeo.gov.au

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BUSINESSES and tech startups can rise to the next level with the City of Sydney seeking expressions of interest for an operator to lease an affordable innovation space in Sydney’s soon-to-be tallest commercial skyscraper.

The 53-storey tower at 180 George Street is under construction and will be Sydney’s tallest office building when it is completed mid-2022.

Located within Lendlease’s broader precinct between George and Pitt Streets, the new precinct is a joint venture between Lendlease, China’s Ping An Real Estate and Japan’s Mitsubishi Estate Asia.

The City and Lendlease are working together to create new community infrastructure in the 180 George Street precinct including the business innovation space, a public plaza, retail laneways, bicycle hub, public art and a new hospitality venue on the site of the former Jacksons on George.

Applications are being sought from organisations to act as operator of a new City of Sydney business innovation space that will operate over three floors of the tower. The lease of the affordable space will run for five years, with a possibility of a further five-year extension. 

Lord Mayor Clover Moore said the availability of affordable office space in the city is critical to the ability of startups to grow.

“Technology entrepreneurs tell us that the lack of affordable office space in the city is one of the biggest challenges they face,” Cr Moore said.

“It is essential that Sydney maintains its status as Australia’s leading knowledge based economy and global city, and we can only do that by fostering and supporting a culture of innovation.

“We’re delighted to be able to offer our startup ecosystem a place in the heart of the city with our new affordable workspace, which will ultimately create more jobs, boost Sydney’s economy, strengthen global connections and make the city a more desirable place to live, work and visit.”

Applications must include a proposed operating model, program and outcomes. These will be assessed under strict guidelines to ensure they meet the City’s objectives.

Applications should detail:

  • support for startups to launch into global markets with a focus on Asia;
  • a core theme and focus industries (if relevant) for the space;
  • measurable community benefits in line with the rental subsidy requested;
  • the average rental subsidy to be provided to startups;
  • details of proposed programming and activities that build connection, community, partnerships, skills, knowledge and capability within a start-up ecosystem;
  • activation of the event space and engagement and contribution to the local startup community;
  • sustainability focused practices such as waste, water and energy use;
  • a commitment to social inclusion practices, including policy or programing, and measurable indicators.

Applicants can review the expressions of interest document and attachments and apply through the City’s online grants management system SmartyGrants. The EOI closes on November 14, 2019.

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NEW figures released today show 5000 small business owners have received help from Service NSW’s one-stop shop Business Concierge service.

Service NSW for Business executive director Bridget Barrett said the service is all about helping people start, grow or run their small business, potentially saving them time and money.

“Service NSW has become more than just a one-stop shop for individual customers, it is also a one-stop shop for small business customers,” Ms Barrett said.

“We make government easier to navigate by reducing paperwork and eliminating duplication so customers can focus on what they do best - running their business.”

The service includes personalised support from Service NSW’s Business Concierge and a digital platform which outlines the regulations and licences needed to start a small business across a range of sectors.

The figures released today also show owners of cafes, restaurants and small bars have saved up to 86 hours of effort. Service NSW has also helped slashed the time it takes to open a small bar by almost six months.

“We’re getting great feedback from business owners who are really satisfied with the help they’ve received and they’re telling others about the service,” Ms Barrett said.

“The Business Concierge had helped 1000 business owners by November 2018. Since then we’ve seen customer numbers sky rocket and we expect that to continue.”

The Business Concierge can help with everything from getting a council development application right the first time, to applying for outdoor dining and liquor licencing.

The initiative is delivered by Service NSW in partnership with the NSW Small Business Commission and Better Regulation Division. More information is available on the website.

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has congratulated the winners of the Outstanding Western Sydney Women Awards, many of whom are hard-working small and family business owners.

The Outstanding Western Sydney Women Awards, held in Parramatta last night, recognised the achievements of several exceptional women from Western Sydney.

“Congratulations to all of the winners and finalists, especially Tania MacLeod of The Stage Door Performing Arts, who was named the overall Outstanding Western Sydney Woman,” Ms Carnell said.

“Tania’s dance school has been in operation for more than 20 years and is well-established in the small business and local community.

“She’s taught more than 10,000 students and her work in providing scholarships to disadvantaged young people is commendable. Tania has also developed a dance program for children with disabilities.

“In fact all of the finalists this year have achieved great things as community leaders, entrepreneurs and tradies," Ms Carnell said.

“My office is a proud partner of these awards and supports the efforts of Western Sydney Women, which has been very effective in connecting women in the region and assisting them in achieving their business and career goals.

“Research tells us the most successful start-ups are created by those who have a network or mentors for support.

“That’s why organisations such as Western Sydney Women are so important in creating a critical mass of female entrepreneurial role models," she said.

“It was an honour to be part of this year’s Outstanding Western Sydney Women Awards and a wonderful opportunity to celebrate the achievements of these talented women.”

www.asbfeo.gov.au

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MANSFIELD QLD 4122