Deanne Stewart, CEO, MetLife
One of the hot topics of the moment in group insurance is age; does default insurance in superannuation for a young person do more damage in terms of eroding retirement income, than it does good in terms of providing protection?
This discussion is integral to the Insurance in Super Working Group (ISWG) proposed Code of Practice, as part of its focus on addressing appropriate and affordable cover and ultimately improving retirement outcomes.
But while age has a strong correlation to lower superannuation balances and is clearly a key consideration in addressing appropriate and affordable cover, gender is another factor that I believe is worth a discussion.
Looking at group insurance, and while it varies across different superannuation funds, an analysis of MetLife’s portfolio shows that women account for 43% of the superannuation membership base, but they generate an even smaller percentage of claims. Approximately 30% of life claims were paid to women, while the percentage of TPD claims paid to women is around 35%.
This suggests that while woman may not be paying more in premiums in a dollar sense, when compared against the benefits that each gender receives woman may be paying more in a relative sense. It certainly goes to the heart of the affordable and appropriate discussion.
Another area for review is the potential impact of premium caps, proposed by the ISWG as a measure that may protect against undue superannuation erosion. The proposed Code specifically asks for industry feedback on the extent that premium limits will achieve the goal of targeting inappropriate account erosion for low income earners, particularly women and younger members.
In terms of likelihood to be low income earners, the gender pay gap is well documented and women are also much more likely to be working part-time than men. According to recent ABS statistics, in 2016-17 almost half of employed women worked part time (45%), compared with 16% of employed men.
If a premium has to be reduced to meet a proposed premium cap, it may come at the expense of cover. And while lower levels of cover may be adequate for a younger person, will they still be adequate for a more mature part-time working mother with a family?
There are many complex discussions to be had when it comes to addressing affordable and appropriate insurance in superannuation, particularly as we look for ways to personalise the group insurance experience, and I believe that gender sits alongside age as a key consideration.
So let’s continue these discussions and work together to find solutions that will continue to provide this invaluable safety net to millions of Australians, in the most appropriate and affordable way.
