Communicating insurance changes to members means striking the right balance between compliance and promotion.
In response to increasing insurance costs, many funds have increased their premiums, changed their benefits or both. Communicating these changes to members represents an opportunity for funds but also potential risk.
Insurance changes are a valuable opportunity to promote the importance of your insurance offering to members and demonstrate the benefits of maintaining or increasing their cover.
The risk is that in promoting your insurance offering to members, you may not be providing all of the information needed to allow members to make informed decisions about their insurance cover.
Achieving a balance between compliance and promotion can be tricky. What can funds do to minimise this risk?
Minimise your risk
1. Be transparent
When communicating insurance changes, it may be tempting to focus on the benefits of your insurance offering and only mention details such as conditions and definitions in the fine print. However, by doing this you will miss out on the chance to build trust with your members by demonstrating your fund’s commitment to transparency.
You will also leave the fund open to potential complaints to the Superannuation Complaints Tribunal (SCT), such as case D13-14\085. In this case, the SCT found that a fund failed to provide the information “reasonably necessary for [the complainant] to understand the nature and effect of the change in insurance arrangements”.
Where the fund went wrong was in focusing on promoting the improved benefits that members would receive, without adequately explaining the conditions attached. Also, in the newsletter communicating the changes, important terms and conditions were put in a smaller font than the rest of the text and no attention was drawn to the importance of the information.
This case shows how vital it is to be transparent in not only what you say to members, but also in how you present the information. You need to ensure you include all of the relevant terms, conditions and definitions and give them equal prominence in your messaging.
Being transparent also means providing members with the context for the changes and a means of comparing what they currently have with what they will have.
Funds often provide the context for the insurance changes in a notice to members, which also includes an overview of the changes and an outline of the further communications and support to be provided. For example, the context for insurance changes in recent times has included changing economic conditions, increasing insurance costs, claims pressure and regulatory changes. Fund sustainability has also been a driving factor.
Personalised communications generally follow the notice to members. These clearly outline the impacts of the changes on the individual. In this way, members can understand what they have currently and what they will have after the changes. Transparency is again vital—members need to know exactly what any new premiums will cost them on a weekly, monthly or annual basis and how this differs from their current premiums.
2. Provide clear actions
Most insurance cover through super is provided on an opt-out basis, so unless members specifically opt out any changes to insurance will automatically apply. This means there is a real possibility of members paying for cover they do not want or need. Once you have explained to members what the changes are, you need to let them know what their options are and how they can contact you.
In case D14-15\161, the SCT found in the complainant’s favour because the fund’s insurance communications focused on how members could increase their insurance cover but provided little information on how they could decrease or opt out of the cover. This was seen as ‘upselling’ by the SCT and a deliberate attempt to make it hard for members to opt out of the new cover.
As this case illustrates, it is essential to provide your members with all of the actions they can take around their insurance cover—this includes how they can reduce or opt out of cover, not just apply for increases. You need to provide your members with the information they need to make an informed decision about what is best for their individual circumstances. This may mean encouraging members to speak to an adviser before making any changes to the amount or type of cover they have.
3. Brief your staff
All of your member touch points need to be considered in your communications strategy. This includes briefing your staff and ensuring your contact centre is fully across the changes and knows how to answer member enquiries. If your staff do not fully understand the changes, there is a risk they could provide members with incorrect information and, at worst, open up the fund to liability in the event of a claim.
In case D14-15\081, a fund was found liable to pay a member the difference between the insurance payout the member was actually entitled to and what a call centre staff member had advised the member they were eligible for. The amount was significant. The SCT found that the fund’s staff had not been adequately advised of the insurance changes, and in some instances did not even know a new policy was in place.
Make sure your staff are aware of what they can and cannot say to members and let them know where to refer members for further information, for example, your product disclosure statement (PDS), insurance guide, online portal or your advice team.
4. Call out the changes on benefit statements
In many instances, it may not be the communications about an insurance change that a member will rely on, but their benefit statement. Following an insurance change, revisit your benefit statement design to ensure that it reflects and, where necessary, calls out the changes to members’ insurance cover. Where possible, spell out any limitations or exclusions that may mean a member is not entitled to the cover listed in the statement.
In case D13-14\085, a member had received two successive benefit statements showing an insurance benefit amount. The member was not actually eligible for the benefit as they did not meet the conditions of the cover and wasn’t aware of this until a claim was made. The SCT found that a note in the statement referring members to the relevant PDS for conditions of insurance cover was insufficient. Having received two benefit statements showing the new level of cover, the SCT determined that “there was no reason for the [member] to refer to the PDS”, and the fund was directed to pay the stated insurance benefit amount.
5. Ensure your data is current
Crafting your communications is only half the battle. You need to make sure that your message reaches all of your members who are affected by the changes. This can usually be done by hard copy and email, depending on your members’ preferences and how your fund chooses to communicate with them.
In case D13-14\052, the SCT found that there were deficiencies in a fund’s insurance change communications as the fund had not “made reasonable enquiries as to the address or whereabouts of the complainant”. The fund had received returned mail from the member on a number of occasions and had put a hold on the member’s mail. The fund had no other way to contact the member (no email address had been provided) and could not prove they had made any effort to contact the member by other means (such as through their employer or by phone). The fund was found liable for the premium amounts paid by the member since the change was introduced.
Funds must be able to demonstrate that they have made reasonable efforts to ensure members have received their communications regarding important changes. This means if you send emails and get bounce backs, you need to show that you have tried to contact members by mail or telephone as well. Actions also include contacting employers where possible to get a member’s correct email or postal address.
Tips for communication
- When communicating insurance changes to members, striking the right balance between compliance and promotion can be tricky
- Provide an overview of the changes including context and benefit to members
- Show the impact of the changes on the individual’s benefits, especially how new premiums will differ from current premiums
- Outline relevant terms and conditions and define key terms
- Provide details of how members can change or opt out of their cover
- Ensure all of your member touch points are covered off
- Direct members to where they can get more information.
These tips will help equip you to successfully navigate your way through insurance change communications and avoid the risk of your fund coming before the SCT.