The industry ombudsman has overturned decisions by an insurer and superannuation fund trustee after the former took too long to pay a claim.

The total and permanent disability claim was made through insurance in super in October 2023.

Resolution Life accepted it in April this year and paid $256,626 based on a July 2023 date of disablement.

The insured said Resolution should have paid much earlier, but the insurer argued it could not make a decision until it received a psychiatrist’s report in March this year, so it decided not to pay interest.

The super fund trustee, NM Superannuation, agreed with the insurer’s decision.

But an Australian Financial Complaints Authority ombudsman says the insurer caused unreasonable delays, particularly by pursuing material from the claimant’s seven previous employers and a psychologist, when it was clear that evidence alone would not satisfy the policy definition.

The insured’s employment history was irrelevant to the claim. And the complainant supplied evidence from his doctor, who said he could not afford, and was not mentally able, to follow up with recommended treatments, including from a psychiatrist.

The liability for these delays should fall on the insurer, but the claimant did cause hold-ups in organising an independent medical expert’s report, AFCA says. Although this was due to his trauma and mental health condition, the insurer should not be liable for delays during this period.

The insurer must pay interest from August 2024 to the date of the TPD payment, and interest on that interest, the ombudsman says.

The trustee, if “acting fairly and reasonably and recognising its legal obligations”, should not have supported Resolution’s decision to withhold interest.

Read the ruling here.