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Stapling a two-fold issue
Underinsurance and lack of any coverage are two separate issues which will both result from stapling – but both will need to be to be fixed independently, according to MLC Life.
Sean Williamson, MLC Life chief group insurance officer, said stapling was going to a be slow burn but it would not need changes made from day one.
“There is a potential that some funds exclude some occupations and if an individual changes to one of those occupations then they may be without cover through no fault of their own and no disclosure,” Williamson said.
“I think the industry will solve that issue, but it may not solve the issue Cbus is trying to push – when they do change roles that they receive insurance appropriate for their occupation.
“The first issue is a deeper issue that people are left without cover, whereas the second issue is one that comes back to the level or type of cover.”
Cbus and the CMFEU were among that voices that criticised stapling and said it would provide inadequate insurance coverage for people who changed jobs.
Insurers, trustees and funds had a role to play in getting around stapling, which Williamson said involved the entities being collaborative within that relationship.
“Being very clear around the member journey, the points in time when they could be making insurance decisions, and trying to articulate the right information – it’s making sure that journey is clear,” Williamson said.
“All insurers will invest more in digital assets, so if they are making those decisions digitally, then those journeys will be supplemented by education implemented into those portals.”
When it came to pricing on group insurance, Williamson said most of the pressure was still upwards, and Protecting Your Super (PYS) and Your Future, Your Super (YFYS) would add to that upward pressure over the long-term.
“We’re still seeing a lot of the regulatory changes have all had upward pressure on group premiums,” Williamson said.
However, Williamson said the data showed the industry delivered value for money.
“In terms of the system itself, 70% of all insurance premiums are funded through super and its 90% for group insurance [versus] 30% to 40% for retail,” Williamson said.
“For me, it’s very customer-centric; when you look at it from a global perspective, 80% is quite high.
“It’s the primary source in which people access life insurance in Australia and if that was removed then we would see a huge underinsurance issue.
“It adds a lot of value for customers and without it a lot of customers wouldn’t have any superannuation or would struggle to make ends meet effectively.”
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