AFRM Referral Partner Newsletter - 10 July 2020
I was looking forward to writing this newsletter as a reflection upon the crazy workload we have all been enduring over the past few months as we got our clients set for the end of the financial year. At AFRM, the past six to nine months has been hectic. We have been working at speed, reviewing our clients to ensure they have the right Income Protection for their needs in place prior to APRA’s mandated changes to Income Protection cover.
On top of that, like all financial advisers, we have been meeting the challenges of the new FASEA examination requirements, doing all we can to support our clients, other stakeholders and communities impacted by catastrophic bushfires – and of course then came the challenges of delivering a seamless service offering amid the social and workplace upheaval of the COVID-19 pandemic. I am proud to report that the team at AFRM handled all of these challenges with grace and efficiency. As I suggested in the opening sentence, I had thought we might be able to share a moment now reflecting back on the challenges we have collectively, successfully, handled under the soft light of the end of the financial year; a time when we can finally take stock and adopt new strategies for success during and eventually in a post COVID-19 affected world. However, when talking to a number of our referral partners, the end of the financial year has brought no respite, thanks to a raft of urgent issues that must be addressed. Increased levels of communication with clients unnerved by COVID-19 and current market volatility seems to be a common theme among advisers, accountants and stockbrokers. The accountants I have been talking to are all focused on supporting and servicing their clients around COVID-19 ‒ its impacts on business, plus the JobKeeper payment scheme and other government subsidy issues. The stockbrokers I have spoken with are consumed by market volatility, while the financial advisers we work with are saying that clients are scared due to the general economic and health uncertainties ‒ so they are just focused on communicating more frequently to really ‘wrap their arms around’ their clients. One financial adviser I spoke with recently also said his main concerns right now are client retention and developing new business opportunities; both of which directly impact on profitability; ongoing financial stability of his practice and maintaining his capacity to keep employing staff. Many of our referrers in the financial advice and accounting fields are also addressing the impacts of the Federal Government’s move to temporarily reduce superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. The rationale for doing so was that retirees would benefit by being provided with more flexibility as to how they manage their superannuation assets. But, if what I am hearing from advisers/accountants and reading in the news is accurate, what this actually means is that in some cases retirees whose primary source of income comes from their account-based pensions are having their income stream halved. Adding to the headache for advisers/accountants is that superannuation funds are not applying the new requirements uniformly. The CEO of Association of Superannuation Funds of Australia (ASFA), Dr Martin Fahy, has said: “In terms of future payments, some funds will say that unless otherwise told, they will apply the new minimum rate, others might tell the member that the default drawdown amount will be based on the usual, rather than temporary, minimum drawdown percentage.” We have empathy for those of you now checking to confirm each of your client's income from account-based superannuation continues to be sufficient to meet their day-to-day living requirements. It mirrors the detailed voluminous case work we, at AFRM, have just concluded in assessing the status of our clients’ Income Protection cover to ensure the best possible protections remain in place prior to the initial 31 March APRA deadline, and then again by 1 July, as additional requirements come into force. Please allow me to say to all of our respected referral partners that we have deeply appreciated working with you over the past financial year to help deliver the best possible financial risk advice to your clients. We deeply appreciate the relationships we have with you and your clients and stand ready to again raise the bar on advice and service levels for clients that need tailored risk advice strategies in the 2021 Financial Year. Sincerely, Rob Vitnell Acting Managing Director, AFRM
“Reduce this ridiculous form!”
To be widowed and raising two teenage / young adult kids alone when you are still in your mid-40s would be a challenge for anyone.
But then to be diagnosed with a chronic autoimmune, neuromuscular disease that causes weakness in the skeletal muscles is a blow nobody can reasonably expect to overcome without difficulty.
Such was the case for Natalie [name changed to protect client privacy] back in 2014 when she was diagnosed with a chronic condition called Myasthenia gravis.
To further complicate her situation, Natalie was also diagnosed with a benign brain tumour.
Fortunately, she had Income Protection, Life and TPD cover through her superannuation fund, because Natalie was off work for four months through 2014 and her IP cover was there to ease the financial burden on the single income family.
Towards the middle of 2015, Natalie was forced to make yet another claim on her IP cover when she had surgery to remove her brain tumour and was again off work for some time.
Fast forward to early 2019 and Natalie’s Myasthenia gravis condition had worsened to the point where she was off work again.
She was suffering bouts of double vision and also drooping of an upper eyelid on one eye.
Her financial adviser contacted AFRM and asked for assistance managing the required claim.
A complicating factor this time around was that the insurer noted Natalie had made several prior claims on her Income Protection cover, each time for Myasthenia gravis, and each time Natalie had ultimately gone back to work.
So, there was a question of satisfying the insurer’s curiosity about why this time may be different from the previous claims made and paid.
By April 2019, after considerable liaison between AFRM and the insurer, it became clear that the insurer may be willing to find in favour of paying the total disability IP benefit but needed further information regarding Natalie’s circumstances, particularly confirmation of whether she had received any paid leave from her employer during her time off work this time around.
It was during the subsequent conversation with AFRM’s Advice Associate, Sonal Brar, that Natalie mentioned her GP and specialist were not optimistic about her ever being able to return to work. They felt the deterioration of her symptoms and her need for ongoing, time-consuming, IV treatments would make it very difficult for Natalie to go back to work.
Sonal quickly recognised that Natalie also then had a potential TPD claim to make and requested that Natalie obtain a report from her GP and specialist confirming the view that she was totally and permanently disabled.
Meanwhile, Sonal advised the insurer that Natalie had not received any paid leave during 2019 and the insurer then confirmed payment of the full entitlement under her Income Protection cover – a sum of more than $3000 paid per month until Natalie turns 65. Very helpful for a person now in her early 50s.
When it came to pursuing the TPD claim, a complicating factor was Natalie’s current neurosurgeon had little patience for the amount of paperwork required by the insurer. He had already written reports and filled out a “doctor’s opinion” form for the Income Protection claim and seemed perplexed as to why he had to do the same again for the new claim.
In fact, he had found the paperwork during the Income Protection claim so onerous that in response to a question in the “doctor’s opinion” form about what the insurer might be able to do to help Natalie get back to work sooner, the surgeon replied:
“Reduce this ridiculous form!”
This is not an uncommon response from medical professionals and clients alike, when filling out insurance claim paperwork. It can be quite an onerous process.
If even someone as intelligent as a neurosurgeon gets frustrated with the level of detail required, is it any wonder why we have so many claims withdrawn by claimants simply because the process of lodging the claim is simply too hard.
This fact is borne out by the latest Australian Prudential Regulation Authority (APRA) report on Life insurance claims and disputes statistics published in April this year. The relevant data can be found on pages 7 through 10 of the report.
The fact is, however, that insurers do ultimately need full details of the individual circumstances surrounding a claim in order to assess whether or not it should be approved or declined.
In this case, Natalie’s neurosurgeon may well wonder why the “doctor’s opinion” form and report he completed for her Income Protection claim could not also be used by the insurer to assess the TPD claim as well; but the reality is the two types of insurance are completely different and insurers have a process to follow for every single claim.
That’s where the expertise of AFRM comes in. Throughout the course of Natalie’s claim it was Sonal from AFRM that kept driving the process to ensure that no details were missed along the way and to support and encourage all stakeholders to do what they needed to do, to ensure all relevant documentation was completed in such a way as to ensure a positive claim outcome for Natalie.
This situation continued for some months until the insurance company case manager finally called AFRM for assistance in breaking the impasse. It was now September 2019.
Around the same time, Natalie’s financial adviser also reached out to AFRM seeking an update.
Sonal said the situation was ultimately resolved by her enlisting Natalie’s assistance in getting the appropriate reports from the appropriate medical practitioners, given Natalie was seeing them regularly for her ongoing treatment.
It was only through Sonal’s persistence that it came to light that one of the reports the insurer had been seeking directly from a specialist, was from a specialist who had not personally treated Natalie for a number of years.
“They were initially seeking information from a specialist Natalie saw about four to five years ago and that specialist was rightly reluctant because he did not have a clear recollection of her case,” Sonal said.
“Long story short, in my various discussions with Natalie and the insurer, we finally got the information from the right medical professionals to complete the claim.”
Throughout this period, AFRM also routinely liaised with Natalie’s financial advice practice, keeping them apprised of the situation and providing advice when asked.
For example, an enquiry early this year asking AFRM’s advice of whether or not Natalie’s ongoing Income Protection payments would be affected if she finally resigned from her job after not being able to work for more than a year.
Sonal said advisers rely on AFRM’s specialist knowledge of insurance products when claim situations becomes complex.
Sonal’s persistence ultimately paid off, with the insurer advising AFRM in March this year that Natalie’s TPD claim had been accepted and that a lump sum of more than $250,000 would be paid into Natalie’s superannuation fund.
“When I rang Natalie to advise her of the claim acceptance, she was very happy and was very appreciative of my help in getting this claim paid,” Sonal said.
“We really do get great financial and health outcomes for our clients,” added AFRM Acting Managing Director, Rob Vitnell.