Anyone who believed that the advent of the new choice of fund regime would provide a bonanza for insurance companies was sadly disappointed.
With five months having elapsed since the introduction of choice, few superannuation funds have found it necessary to improve their insurance offerings to members, although plenty are keeping their options open.
According to the executive manager, marketing and business development, with UniSuper, Paul Murphy, there is certainly a need to be aware of insurance in terms of providing a competitive offering, but it does not represent an overriding issue.
“Our members aren’t particularly aware of their superannuation insurance arrangements,” said Murphy. “The focus is more firmly placed on investment performance. That said, I believe that insurance may be a bit of a sleeper and that fund members should and will be looking into it.”
This is a view shared by the general manager of the newly formed life company within International Underwriting Services (IUS), Phil Collins, who said that while there was plenty of interest from members in the types of insurance being provided by funds, it was not something likely to prompt them to change funds.
“Insurance isn’t yet of increased concern to fund members,” said Collins. “There certainly won’t be an avalanche of employees looking to change funds on account of insurance or anything else. But insurance will become important in the future, and I’m not sure that trustees and insurers are aware of this.”
In a competitive superannuation environment, the consensus seems to be that insurance, like so many other fund services, is yet another area in which funds can be compared. But if movement in super insurance is set to occur, will it be towards increasing the level of cover or increasing the number of products?
According to Murphy, it’s about assessing the situation based on the fund’s individual circumstances.
“UniSuper will be ensuring that our products and the level of cover we provide to our members is competitive,” he said. “We have recently introduced income protection as an optional cover with this in mind.”
“UniSuper is focused on the super-specific needs of its members,” added Murphy.
Collins believes there is definitely a need for new products, as well as increased levels of cover within insurance passed on to the super industry.
“Over the last five to 10 years, the super industry has experienced more movement than in any other decade,” said Collins. “It is a far more sophisticated industry now and I don’t believe the insurance market has kept up.”
Collins said that this belief and IUS’ recognition that the superannuation insurance market has been stagnant for some time was the basis for its new venture into life insurance.
“Funds today have both large and diverse membership bases,” he said. “The best way forward for superannuation insurance is through innovation of both service and product.”
When it comes to insurance premiums, specifically those involved with group income protection, John Cavana, group marketing manger at IUS, suggested that it was about the basics — whether the fund’s arrangements were opt-in or opt-out.
“IUS prefers opt-out arrangements because it means total coverage for every single fund member,” he said.
