AMP and Prime Super have responded to a critical report on the use of restrictive terms in group disability insurance policies.

The report last week by Super Consumers Australia says some super funds continue to include tests such as activities of daily living (ADL) to assess claims.

The consumer group says over the last two years more than half the market has removed or significantly reduce the impact of this “junk insurance” term that applies most often to those working in hazardous jobs, are part-time or casual workers, are full-time carers, or who have been out of the workforce.

But a number of funds have not taken down the restrictive terms or done enough to narrow their impacts, it says. It named AMP and Prime Super as among those on the list.

A spokesman for AMP says the business has been working closely with insurers to deliver important enhancements to total and permanent disability insurance definitions.

The spokesman told insuranceNEWS.com.au the changes will come into effect on December 1 across the majority of AMP’s super plans and this includes removing and replacing the ADL test.

Prime Super says its insurance policies currently include ADL tests but a review is underway.

“The ADL limb, is only one definition available to members,” a Prime Super spokesman told insuranceNEWS.com.au. “They do not have to meet ADL to be paid a benefit and so it provides another option for them to meet the definition of total and permanent disability if they don’t meet any of the other (more common) limbs.”

Prime Super says over the last 10 years it has paid out to members 93% of insurance premiums received.

It says the payout rate is “a sign that we honour our commitment to members in accordance with our Insurance Claim Philosophy”.

“Our Insurance Claim Philosophy underpins our actions, and those of our insurer, during the claims process,” the spokesman said. “We commit to support our members and their dependents through their time of need by paying all genuine claims promptly and with compassion.”

Super Consumer Australia says ADL is the most common restrictive test used.

“Fund members whose claims would be assessed under these restrictive tests are effectively paying for ‘junk insurance’,” Director Xavier O’Halloran said. “We applaud funds who have removed these restrictive terms.

“It shows that removing or reducing the impact of these terms can be done. We call on the holdout super funds to remove these terms and make sure all their members can rely on their insurance if they’re ever forced out of work by illness or injury.”