ClearView said in its submission to the life insurance inquiry that group insurance should be required to be offered on an ‘opt in’ basis rather than the current ‘opt out’ model.
“We believe a system which requires members to consciously opt in for group insurance in super will result in a substantial improvement in understanding what they are, and are not, covered for and how much cover they have,” ClearView said.
“This will significantly reduce the number of workers who think they, and their loved ones, are adequately protected when they’re not.
“Importantly, it will lead to more workers seeking advice, either via their super fund or a third party, about the type and level of cover they need.”
However, insurers TAL and MLC oppose ‘opt in’, instead lending their support for the current ‘opt out’ model in their submissions.
MLC said that if group cover is shifted to an ‘opt in’ basis, thereby altering the size and risk profile of the insured population, anti-selection risk would likely increase, leading to an increase in overall risk for insurers.
“This scenario brings with it negative cost implications for all customers and could potentially cause some people to be unable to access insurance at all, for example if they have a poor health record,” MLC said.
TAL argued that group insurance relies on broad community participation model, and that the ‘opt out’ model “is central to its efficiency and effectiveness”.
“Without ‘opt out’, the group life insurance model will fail to function, premiums will increase substantially and many people will not be provided life insurance at all through this or any other channel,” TAL said.
If you are taking money from a customer without their consent (opt out) then what is difference between this and stealing??
Of course…….. it HAS to be opt-in.
That’s the only ethical choice.
If you bring on anti-selection in group insurance I anticipate we will soon say goodbye to group insurance with proof free limits….therein lies the dilemma. So the product needs to change for this to work?
No organisation should be allowed to profit by taking money out of an account without the permission of the account holder. For those who think Aussie workers are so stupid and uneducated that profit driven organisations (including industry funds) should be allowed to help themselves to member accounts, without obtaining permission, you should get out of the financial services sector now! It is precisely this sort of arrogance and morally bankrupt behaviour that gives our industry a bad name.
[size=20px][color=olive]Group auto covers can be a great deal for some people. Both sides have good points, but unfortunately uneducated/ignorant people will just say no to insurance cover as it is seen by many as an unnecessary expense. The same people who will get upset when they find they have no cover when needed, and someone at the BBQ on the weekend told them they probably have insurance in their super.
At the other end people who change jobs in their 50s and 60s can get auto covers costing $5k a year which they are ignorant to as well.
Financial education needs to improve before people can reasonably make an semi conscious decision for no insurance, perhaps why mysuper legislation mandates some basic insurance cover?[/color][/size]