Published: 21 March 2016
You may be entitled to interest on a slow TPD claim
If you have lodged a total or permanent disability (TPD) claim with your superannuation fund or against your own insurance policy, then you might be entitled to an interest payment if the super fund or the insurer take too long to make a decision on your claim.
The Insurance Contracts Act 1984 applies and Section 57 of that Act requires an insurer to pay interest on an amount payable to an insured person, commencing on the day from which it was unreasonable that the insurer withheld payment until the day that the payment is actually made.
That means that if an insurer takes an unreasonably long time to assess your claim, or rejects it outright and you successfully challenge it, you may have a claim to interest on your TPD benefit from the time it became unreasonable for the insurer not to pay your claim.
There is case law which says that 6 months should be enough time for an insurer to assess your claim once you have provided all the relevant information. Therefore, if an insurer has taken longer than 6 months to assess your claim and you eventually win, you might also have a claim for interest.
The current rate of interest you could claim is 5.55%. So depending on the amount of your TPD claim and how long the delay was, you may receive a significant payment of interest if there has been an unreasonable delay in approving your TPD claim.