Consider altering insurance policy design: SuperRatings
Superannuation funds should consider the possibility of changing the design of insurance policy to mitigate against further premium increases going forward, SuperRatings has suggested.
In a statement, SuperRatings said steps such as a greater reliance on income protection was appropriate, rather than on lump sum total and permanent disablement (TPD) payments.
SuperRatings general manager of consulting Wendy Tse said funds can do more to individually tailor insurance premiums across varying gender and occupational categories, rather than utilising a range of blended rates for all members.
“This will ensure any future premium increases can be accurately targeted at those segments of a fund that claim more frequently,” she said.
Ms Tse also suggested that greater responsibility should be placed on superannuation trustees in respect of the quality of their insurance data.
“Insurers are increasingly demanding that data quality requirements be included within insurance contracts and insurance policy reviews,” she said.
“This includes the ability to audit the fund’s insurance data to adjust premium pricing where significant discrepancies in the data provided are identified post-appointment.”
Recent SuperRatings research shows that default levels of death and TPD cover have increased on average by 10 per cent of the past four years, the statement said.
Alongside the increase in cover has been a substantial rise in premiums over the last 12 months, with the median increase around 50.5 per cent.
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