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Carol's story: Insurance delay making bad situation worse

Lawyers say delay by insurers adds to claimant's distress 

Last updated: 15 September 2022


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • 'Carol' is a victim-survivor of domestic violence who became unable to work because of her psychiatric injuries
  • When Carol claimed on her disability insurance, her insurer delayed the claim for months. Carol's lawyer says this hold-up added to her distress
  • Super Consumers Australia says there needs to be enforceable claims-handling rules so vulnerable claimants don't have to endure further distress during the claims process 

This article mentions domestic violence and suicide. If you or anyone you know needs support, contact: Lifeline on 131 114 or at, Beyond Blue on 1300 224 636 or at, 1800Respect on 1800 737 732 or at

More than two million Australians have experienced physical and/or sexual violence from a partner. For many, this is a sobering statistic. For Carol (not her real name), it was her reality.

She suffered debilitating psychiatric injuries after her domestic partner tried to run her off the road when she was a pedestrian. He later committed suicide in their home.

Carol had worked at Woolworths but couldn't return to work because of her injuries. Like many Australians, she had paid for disability insurance through her super fund for years. 

As with many policies, Carol's stated that she would be considered disabled if she couldn't find a role bearing in mind the education, training and experience she had. For the purposes of her disability insurance, her medical specialists verified that she couldn't work again.

Process causing further distress

But when Carol made a claim, Melissa O'Neill, special counsel at Shine Lawyers (which represented Carol) says the insurer unreasonably delayed her claim, showing no sensitivity to her situation.

"It's horrific," O'Neill says. "The issue we've had with [the insurer] is that they're gathering evidence that addresses their inflexible and dogmatic criteria within their own processes.

"It's being applied in a way [that's] causing her further distress."

O'Neill says the whole point of this disability insurance is to provide financial support when someone suffers injury or illness and can no longer earn a wage.

"It beggars belief that an insurer providing insurance for people in their time of need would cause further distress for people in that time of need," she says.

Unreasonable delay is common, and hurts claimants

When O'Neill talked to Super Consumers Australia, Carol's case had already been dragging on for more than six months. The main problem was that the insurer was mechanically seeking information that wasn't relevant to the question of whether Carol met the policy's definition of disability and should receive her money.

O'Neill had contacted the insurer with these concerns. After talking to us, the insurer finally decided to settle the case with Carol, but O'Neill says it should never have taken so long.

Knock-on effects

O'Neill says this kind of delay in a disability insurance claim can have a disastrous impact on a claimant's day-to-day life. Delay can cause a claimant to fall behind on their mortgage payments in some instances, and often means they can't afford to access the health care they urgently need.

Carol's case had already been dragging on for more than six months

"The biggest issue [around claims assessments] is that they're not done in a timely way," says O'Neill. "Delay by an insurer can entrench the disadvantaged position of the client.

"My experience of 20 years of reading medicolegal and psychiatric reports is that the longer you leave treatment, particularly for mental health issues, the less favourable the outcome."

O'Neill says that this episode is far from a one-off. 

"The behaviour of this particular insurer … [is] typical across many large group insurers to mental health claimants," she says.

Impact of delays on mental health

It's long been recognised that unreasonably delaying insurance claims can impact the mental health of claimants. Complaints about the insurance in super make up 43% of matters that go to the tribunal, and lawyers working in this space say they've received complaints about delay "pretty consistently" over the years.

There is an insurance code of conduct, but it's only voluntary

O'Neill says an enforceable code of conduct around claims handling would "absolutely" improve the experience of claimants in a case like Carol's. There is an insurance code of conduct, but it's only voluntary. 

Just last year, industry lobby groups decided to scrap a code of conduct that could have helped improve how insurers and super funds treat claimants by introducing enforceable standards. Both the Productivity Commission and banking royal commission had recommended the industry adopt an enforceable code.

"There are some guidelines in the [voluntary] life insurance code of conduct that talk about claims handling specifically for domestic violence victims, and we would suggest that [the insurer's] claims handling process has not abided by those," O'Neill says.

We need an enforceable code, says Super Consumers Australia

Super Consumers Australia policy manager Franco Morelli agrees with O'Neill on the importance of a robust code.

"It's time we had proper enforceable rules on claims handling to prevent claimants like Carol from enduring further distress and financial disadvantage from the process," he says.

"Super funds and industry lobby groups have tried and failed to develop a code, and then dumped it. We can't let the industry keep getting away with these stopgap measures and weak self-regulation in this vital area."

"The Government has a role to play here. It can impose a mandatory code. It has the power to do this when an industry which has insufficient cohesion to develop a voluntary code or where industry has engaged in egregious conduct. It can also call for a review into insurance in superannuation to see if its really working for all Australians."

Super industry 'not serious' about standards

Financial Rights Legal Centre CEO Karen Cox has also criticised the industry's move to scrap the Insurance in Super Voluntary Code of Practice in favour of industry "guidance".

Superannuation bodies are often guilty of failures in claims-handling processes that have serious detrimental impacts on clients

Financial Rights Legal Centre CEO Karen Cox

"Replacing the objective of an enforceable code with a couple of 'papers' sends a message to consumers, governments and the public that the superannuation industry is not serious about creating and improving standards that consumers can rely on," Cox says. 

"Superannuation bodies are often guilty of failures in claims-handling processes that have serious detrimental impacts on clients."

FSC consultation 'encouraging'

Morelli notes that the Financial Services Council (FSC), an industry group representing retail super funds and life insurers, is consulting on strengthening its guidance around claims handling with a view to turning it into a mandatory, enforceable standard. 

"The FSC consultation is an encouraging development," says Morelli. "We hope its standard, when completed, uses stronger language, and introduces firm commitments and enforceability. A robust and enforceable code would be a valuable step forward. Other industry groups must come to the party and recognise the importance of a powerful code to protect fund members. 

"Every Australian should have peace of mind that the disability insurance they're paying for through their super will be there for them if they ever need it."

This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.

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