When a fund or insurer rejects an insurance claim, whether it is a claim for TPD, income protection, home insurance or any other type of claim, you don’t have to simply accept the rejection. If you do not agree with the rejection of your claim, you should consider what steps can be taken to question, challenge or appeal the decision. The following article gives an overview of your rights in relation to rejected insurance claims.
Internal Dispute Resolution (IDR) complaint
No matter whether the rejected insurance claim is:
- a superannuation-based insurance claim (TPD or income protection);
- a claim to an insurer alone (for example, TPD insurance outside super);
- a life insurance claim; or
- a general insurance claim (for example, home and contents, motor vehicle insurance, travel insurance etc),
you have an entitlement to appeal the rejected claim to the original decision-maker directly.
All super funds and insurers have a process for handling internal appeals and some even have whole departments set up to deal with these complaints.
Many people are cynical about internal reviews of IDR complaints and feel that there is little point appealing to the original decision-maker (ie the insurer or superannuation fund that originally rejected their claim), but IDR complaints are a worthwhile step. We often have success when we appeal a super fund or insurer’s decision internally, particularly when we are able to get further supportive medical or other materials to be exchanged along with the complaint.
Under updated rules, if you make an IDR complaint relating to a decision of a superannuation fund, they must respond within 45 days and if the complaint relates to a decision of an insurer alone, they must respond within 30 days.
The Australian Financial Complaint Authority (AFCA)
One possible step to appeal a rejected insurance claim is an appeal to AFCA. Before any appeal is made to AFCA, it is a requirement (and a good idea) that a complaint is first made directly to the superannuation fund or insurer.
The rules relating to how AFCA handles complaints against superannuation funds and insurers are different, as are the time limits for bringing complaints, but the process is, generally speaking, the same:
- As part of most AFCA complaints, a case manager will be assigned and documents and submissions will be exchanged between the parties.
- There is usually a conciliation (held via telephone).
- If the conciliation doesn’t resolve the complaint, the case manager usually delivers a recommendation about the outcome that they think is fair and reasonable under the relevant law.
- The recommendation is binding if both/all parties to the complaint accept it. Otherwise, the complaint will proceed to a final determination which is delivered by an ombudsman.
A determination is binding on the super fund/insurer and must be complied with if accepted by you, but you don’t have to accept the determination and can decide to bring further court action if you are not happy with the decision. Importantly, only decisions involving superannuation funds can be appealed on questions of law to the Federal Court.
Another appeal option available to you if your insurance claim is rejected is a court claim (sometimes also called litigation). You can lodge a court claim on a rejected insurance claim involving an insurer alone or involving both an insurer and a superannuation fund. The process is basically the same for each. There are strict time limits for bring court claims.
Court claims can be lodged in all Australian states and territories in various different courts. There are differences from state to state in how court claims will proceed. There are also differences in the way that court claims proceed in different jurisdictions in the same state (ie the Supreme Court in NSW is different to the District Court in NSW).
The following is a general overview of how most court claims proceed:
- A statement of claim or some other formal document is lodged with the court to start the claim (sometimes also called a proceeding).
- The insurer and/or superannuation fund must then usually lodge a response to the statement of claim (or equivalent). This document is usually called a defence.
- The parties will then usually exchange all of the documents which they have which are relevant to the claim. This process is called disclosure or discovery.
- After this, the parties will usually get and exchange the expert and medical evidence which they rely on to support their claim and a mediation is usually held sometime after this.
- If the matter doesn’t settle at mediation, the matter will proceed to a full court hearing, usually before a judge alone.
There are a number of other steps which may also take place. For example, interrogatories may be exchanged. This is a process where one party asks another a bunch of questions which must be answered in a sworn statement. The parties may also file and serve subpoenas on your doctors to get complete copies of your medical records.
The court (or litigation) process can be stressful and can take months or even years to resolve your claim. However, it is a very useful way to get your insurer to take your claim seriously and can result in great outcomes on your insurance claim.
Importantly, when you make a court claim you will be able to claim the insurance benefits, interest, costs and sometimes some other damages which you have suffered due to the insurer’s conduct on your claim.
Find this article useful or interesting?
You may also like to read some of the following related articles:
- What to do if your superannuation TPD claim is rejected
- Has an obscure definition of TPD by your super fund resulted in your claim being rejected?
- When am I owed interest on my TPD or income protection benefit?
- 5 common tricks and traps when claiming TPD insurance
- Your rights if your TPD/income protection/life insurance claim is under investigation
If you've had an insurance claim rejected and you believe that decision is wrong, you should investigate your options to appeal. We understand it can be daunting and often complex but we are able to assist you no matter what type of insurance claim has been declined.
Give us a call for some free advice. It costs you nothing to find out where you stand.
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Brisbane: 07 3013 4300
Anywhere else in Australia: 03 9448 8048
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