Mr Williams told Risk Adviser he intends to set up a Scrutiny of Financial Advice inquiry and alter the terms of reference to include the life insurance industry.
“Once you go to an election, all those inquiries stop, so I intend to reinstate the inquiry into the life insurance industry,” Mr Williams said.
The senator said there have been plenty of reports of wrongdoing in the industry, adding that he has been receiving complaints from individuals regarding life insurance policies tied to their superannuation.
“I’ve been faced with a situation where millions and millions of Australians do not even know they’ve got life insurance automatically tied up with their superannuation,” Mr Williams said.
“They probably don’t know how much insurance there is or how much premium they’re paying.”
Mr Williams cited a case where an industry super fund rejected a claim from one of its members before they even went to the insurance company because the member didn’t have enough superannuation.
“If you’ve got life insurance, it should be regardless of how much superannuation you have,” he said.
“If I insure my house for fires and storms and it burns down, the insurance company will pay me for the house that’s been burnt down, regardless of how much money I have in my savings account.
“That is irrelevant.”
As for the role super funds should play in ensuring their members have adequate life insurance, Mr Williams said this would be unclear until the inquiry is approved by the new parliament.
another uninformed politician trying to change something he clearly knows little about. I bet the FSC will lobby and manipulate him!
Whilst I support a review into Group Superannuation in life insurance, which should also include Direct insurance and can cover retail, Mr Williams is clearly misinformed about insurance in general. The premiums for cover held in super are paid by super. If the premiums aren’t paid then the insurer won’t pay, regardless of what type of insurance you have. His house burning down wouldn’t be covered if the premiums weren’t paid on that policy either.
I also agree people should be educated on what cover they have in super, but mainly because it is inadequate, the terms and conditions are restrictive, the definitions are generally poor, and claims are extremely difficult to make.
Broadly, I would argue the independent adviser community would support this review, though it sounds like Mr Williams needs a lot more education on where the issues he is referring to lie.
The review needs to consider Trustees of super funds both public offer and industry funds and the instructions they are giving the underlying insurers.
It also needs to extract some real information on the Direct insurances that are marketed so heavily to the Australian Consumer. On a sample tested recently the direct alternative was over 100% more expensive than a retail intermediated version with underwriting at claim time. Mr Williams needs to understand the claims experience these consumers are having with reportedly up to 46% being denied.
Happy for advisers being in this mix but with some companies saying over 90% of their new business comes from direct and group wouldn’t you focus on the 90% and solve the issue for the vast majority of consumers?