Five superannuation bodies have publicly stated their “common belief” in principles of group insurance within superannuation.
The joint statement was issued by the Association of Superannuation Funds of Australia (ASFA), the Australian Institute of Superannuation Trustees (AIST), the Financial Services Council (FSC), the Industry Funds Forum (IFF) and Industry Super Australia (ISA).
“Group insurance in superannuation is fundamentally the right policy setting for millions of Australians but it can be improved. We intend to build on these current initiatives to consolidate our efforts in future iterations of industry policy development,” said the statement.
“The super industry is rightly very concerned about the spate of negative stories about insurance in the media. Trustees are very aware of their obligation to act in the best interest of their members and work tirelessly to ensure the right outcomes are achieved. However, if members are not getting value from their insurance, or worse, not getting pay outs that they are entitled to, this needs to be addressed,” said AIST CEO Tom Garcia.
“But there are also many thousands of untold stories of workers receiving payouts during their unexpected time of need. Without default insurance in super, these workers might otherwise have no insurance.”
“The fundamental challenge is finding the right balance between ensuring the insurance offerings in superannuation are sustainable but also adequate, in terms of both price and cover.”
“There is a very positive role for default insurance inside superannuation. It would be a great pity to see this become the exception rather than the rule,” Mr Garcia said.
The superannuation group insurance principles are:
- Group insurance in superannuation has been a successful policy for Australia which has resulted in better risk protection for Australians from all walks of life.
- It provides a safety net to millions of Australians who would have otherwise not chosen or been unable to take out life and disability insurance individually.
- Automatic default cover in superannuation, provided to members on an opt-out basis, has helped combat the problem of underinsurance in Australia.
- Superannuation trustees and group insurers must work together in order to achieve the most sustainable benefits for members.
- The following initiatives have been undertaken over the past 18 months as part of the industry’s commitment to sustainable, high quality group insurance cover:
- FSC’s Life Insurance Code of Practice, to be released on 11 October, which places binding obligations on life insurers
- ASFA’s Protocols for superannuation TPD Claims
- IFF’s group risk insurance management framework, which addresses issues such as automatic acceptance levels, TPD definitions, fee arrangements for lawyers and data
- The IFF-led Insurance Data Standards working group
- AIST Insurance Community of Interest initiative to consolidate benefit design, practice, system and data issues
- FSC/AIST/IFF/ISA jointly-developed guidance note: Best Practice for Group Insurance Data Collection