Company blamed for Cbus insurance delays hits back

The chief executive of a superannuation administration platform has hit back at Cbus chair Wayne Swan’s claims that the “paucity of competent administrators” was to blame for super fund members waiting too long to receive their insurance payouts.

Vivek Bhatia refused to respond to Swan’s main swingeing criticism that his organisation, MUFG Pension and Market Services, was “principally” responsible for delaying the handling of 10,000 Cbus members’ death and disability claims, but denied that the issues were solely a result of incompetent third-party providers.

MUFG Pension and Market Services chief executive Vivek Bhatia. Credit:

“We have strong and long-tenure relationships with 20 superannuation funds where we do provide end-to-end administration services … from time-to-time there are challenges, but we have always worked together to ensure that we can remedy them,” Bhatia told a Senate inquiry on Friday.

“This is a highly competitive environment. We have a lot of local and international players in this market who provide a plethora of options for administration services … I believe there are a lot of options [for super funds].”

The Australian Securities and Investments Commission last month launched Federal Court action against the $94 billion construction fund over allegations it had failed to identify and prevent delays that have affected thousands of people since August 2022.

Swan and Cbus chief executive Kristian Fok have apologised to members for the “unacceptable” delays, but appearing before the same inquiry last month apportioned the blame to MUFG, formerly known as Link, to which it has outsourced claims handling.

Fok called out high staff turnover at the third-party administrator as a reason behind the poor customer service, while Swan said the entire superannuation sector was grappling with issues stemming from MUFG.

In a speech in October, Swan lambasted the “very poor performance” of Link and said that Cbus was one of many funds that had been hit by delays because “Link hadn’t properly staffed its centres”.

“The infrastructure of the industry, given its size, is a vital concern, and it’s bigger than what’s going on in any one fund at any one time. So the industry, I think, has got a conversation to have in the not-too-distant future about how we collectively deal with this challenge of a paucity, if you like, of competent administrators in the field,” Swan told The Australian Financial Review’s Super and Wealth summit.

Superannuation lawyers have previously told this masthead that administrators were a major part of the problem but stressed that super funds, as trustees, were responsible for looking after members’ money and therefore sufficiently resourcing the system.

Cbus chairman Wayne Swan laid the blame at the feet of third-party administrators for delayed claims handling. Credit: Louise Kennerley

“Like many organisations, we emerged from COVID-19 into a full-employment market with widespread skills shortages and a significant increase in claims volume,” Bhatia said.

“It was during this challenging period where some members did experience delays. Since then, we have continued to collaborate with our clients on initiatives around member experience processes and resourcing … The issues highlighted recently are sector-wide and will require all stakeholders to collectively improve the experience that members receive.”

In documents filed with the Federal Court, ASIC acknowledged the claims handling had been outsourced to MUFG but alleged that Cbus had failed to take several steps under its contract with the company to rectify the delays. It also said ultimate responsibility was with the fund.

Bhatia said the superannuation industry did not have standards requiring third-party administrators to close a claim within a certain timeframe, leading to lengthy delays and members being left in the dark about their application.

Also appearing before the inquiry, TAL Insurance life and retirement group chief executive Jenny Oliver said the insurer had paid out Cbus members about $370 million last year. She also praised Cbus for “working very hard” on behalf of their members making an insurance claim.

Oliver denied claims by committee chair Andrew Bragg that Cbus was being paid bonuses to approve fewer claims under the Premium Adjustment Mechanisms – which are arrangements between funds and their insurers to return some group risk premium payments back to the fund if the claims are less than what was assumed when the insurance contract was signed, and vice versa.

“It’s not a sharing of profit; it’s an adjustment to the premiums over the longer term,” Oliver said.

“Anyone who has delegation to make a decision [on approving or denying claims] does not have any incentives or KPIs associated with the amount of claims they decline. Rather, they’re incentivised on the quality of the decision that they make.”

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