Advisers stand behind opt-out group insurance

An ifa reader poll on what stance the federal budget should have taken on insurance in super found 85.1 per cent of the more than 2,000 respondents believed opt-out arrangements should be kept.

Only 4.1 per cent of respondents supported the budget proposal to change group insurance arrangements to opt-in for members under 25 years old or with a balance of less than $6,000.

The remaining respondents believed the system should either be changed to opt-in for all members, representing 7.9 per cent of respondents, or left to the discretion of funds, accounting for the final 2.8 per cent.

The data indicates that advisers are at odds with a number of insurance industry players, including the Financial Services Council and Clearview, both of which have backed a shift to an opt-in arrangement for younger members.

In a statement, ClearView managing director Simon Swanson described the proposed change as “sensible public policy”, adding that an opt-in system would “result in a substantial improvement in understanding what cover they have and don’t have”, and curb balance erosion caused by unnecessary fees.

The Productivity Commission also threw its support behind the change in its Superannuation: Assessing Efficiency and Competition draft report, saying the balance erosion caused by insurance premiums was “not insignificant”.