Last quarter saw dozens of headlines lambasting superannuation funds for delays in processing death benefits and insurance claims. The Australian Securities and Investments Commission (ASIC) announced that they were suing Cbus for “systemic claims handling failures”, while AustralianSuper paid $4.2m in compensation to members impacted by similar delays.
We’ve written about delays in processing death benefits and insurance claims several times over the last 18 months. Given the amount of media scrutiny this issue is still receiving, we figured it would be worthwhile revisiting it and taking a more considered look at whether technology can help, and how that might look.
It’s worthwhile disclaiming that the solutions we talk about in this article presuppose that the legal and regulatory underpinnings of the system remain the same. Reform to increase the rate of binding beneficiary nominations, for example, would go a long way to reducing delays in processing. But, failing that, here are some ways in which we think the current process can be improved.
A complex process
Processing death benefits and insurance claims is highly manual and human dependent. Trustees must navigate a web of legal, procedural, and interpersonal challenges, balancing regulatory compliance with sensitive family dynamics.
To illustrate this, consider the process involved in identifying and ultimately allocating a death benefit to beneficiaries. In line with the Superannuation Industry (Supervision) (SIS) Act 1993, the fund’s trust deed, and the deceased’s beneficiary nominations, the trustee must identify and consider the needs of all eligible beneficiaries. This can become particularly complex in situations where no beneficiary nomination was made by the deceased, or where large, blended families with many potential beneficiaries are involved.
The trustee must then review all documentation and evidence and decide on the allocation of the death benefit to each beneficiary. Beneficiaries are then notified and given the opportunity to contest the decision. If a dispute arises, the trustee may conduct an internal review and revise their decision if appropriate.
These activities require a high degree of subject matter expertise and exercise of judgement. Decisions hinge on knowledge of superannuation legislation, tax rules, the fund’s trust deed — in especially complex cases it may require familiarity with case law, or diverse cultural awareness. These kinds of intricacies make the process difficult to scale and prone to bottlenecks when staff shortages occur.
Can technology help?
Given this complexity, is it reasonable to expect technology to play a significant role in preventing future delays in processing death benefits and insurance claims? We’ve spoken in the past about tech solutions that might help, including:
-
- Appropriate workflow and claims management software, including support for triaging claims.
-
- Integration and interoperability between funds, insurers, administrators — even government agencies.
-
- Process analytics to pinpoint systemic causes of delays and other issues.
These interventions can definitely make a difference, as we’ve discussed here and here. However, none of them can make up the shortfall when there are simply too few capable staff available to address the volume of claims being received. We are cautiously optimistic that some of the latest advances in generative AI might be able to go further.
Agentic AI seems to be the AI buzzword of the summer. It’s being used to refer to a combination of LLMs, more traditional machine learning methods, and good ol’ enterprise automation to build autonomous agents capable of taking independent actions and pursuing multi-step goals. Based on the deep-seated sense of revulsion we feel when we find an AI where we don’t expect one, exposing grieving claimants to an AI agent would likely be a disaster. But building an AI agent that fund staff can treat like an experienced and knowledgeable coworker has potential.
An AI coworker?
An AI coworker would be made available to claims processing teams via enterprise messaging platforms like Slack or Microsoft Teams, and would need to be able to field queries from staff and perform tasks including:
-
- Extracting key information from documents, including death certificates, forms, evidence of relationship, medical records, wills, probate, etc.
-
- Assisting with drafting emails and other communications to claimants.
-
- Proposing an allocation of the death benefit to each beneficiary based on the same factors a human would consider, plus a complete database of previous cases handled by the fund.
-
- Giving guidance on what activities still need to be completed, and how they should be handled to ensure compliance.
-
- Assisting with recordkeeping and the maintenance of an audit trail.
If implemented correctly, an AI coworker of this kind could both increase the productivity and consistency of existing claims staff and dramatically reduce the amount of time it takes for new team members to become capable and productive. This kind of approach would make it possible to rapidly address short staffing, and to scale up when volumes spike.
Potential pitfalls
As with many applications of AI, there are potential pitfalls to be avoided in implementing an AI coworker. Some of these include:
While AI and other technologies hold immense promise, their success hinges on careful implementation and oversight. By combining the power of automation with human expertise, superannuation funds can ensure that they meet regulatory demands while also improving outcomes for grieving beneficiaries.
This article was produced as part of The Quarterly – Q2 FY25
For more information about anything you’ve read here, or if you have a more general inquiry, please contact us.
Key Contributors:
Kevin Fernandez is General Manager, Market Strategy and Propositions at Novigi, and is based in the Melbourne office.
Sophie Coianiz is an analyst in the Market Strategy and Propositions team at Novigi, and is based in the Sydney office.