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Inter-fund consolidation another blow for insurance, says AIA
Inter-fund consolidation could throw another spanner in the works for super fund members with multiple insurance benefits through their superannuation, AIA's head of group insurance Eleanor Ottaviano has claimed.
Ottaviano said there had not been enough impact analysis on the consolidation of a member's multiple accounts containing different insurance balances.
"I think more analysis needs to be done because we don't want to be in that situation where it's claim time and the member feels that they're entitled to cover and then they find at the time that they actually need it most that they don't have that cover," she said.
She said the biggest concerns were loss of cover for members — both in terms of the level of cover and types of cover a member might have.
"Members — even when they're not engaged — may have seen on a statement three years ago that they had $400,000 total and permanent disability cover and now all of a sudden they need to claim — it's just making sure ideally that insurance can be aggregated," said Ottaviano.
She said auto-consolidation and intrafund consolidation would have unknown impacts on the pricing of risk pools, which may be end up operating an unsustainable pricing model going forward.
Although AIA supported the aim to lessen the multiple fees members may pay, it hoped that the extension on intrafund consolidation from January to June next year could be an indication that the Government would give the question extra thought or conduct the appropriate analysis, according to Ottaviano.
"I would hope that the delay in the start date for the inter-fund consolidation means that they're taking more time to consider the impacts of auto-consolidation," she said.
Inter-fund consolidation was introduced into Parliament on 20 March 2013 with a start date of 1 July 2013 and the first round of consolidation due by 30 June 2014, the Australian Taxation Office (ATO) said.
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