PYS changes already impacting claims

Industry superannuation fund, Hostplus has already turned down seven life insurance claims from members who were unaware of Protect Your Super (PYS) changes that would opt out members under 25 and those with balances of less than $6,000.

Speaking on a panel at the Association of Superannuation Funds of Australia (ASFA) conference on Thursday, the fund’s head of insurance, Shane Fielding, said the of the claims five were terminal illness claims and two death claims.

These members were automatically opted out of life insurance in their super due to PYS changes on 1 July, 2019, as they did not notify Hostplus to opt them in.

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“That’s just the tip of the iceberg. There will be total and permanent disablement [TPD] claims down the track in months or years that relate to this period where we’ve cancelled people’s cover,” Fielding said.

“We won’t know until we get those claims in and we’ll have to tell them that their cover is cancelled.”

Fielding noted that younger super members did in fact make insurance claims and over the last five years Hostplus had paid out 300 claims totalling $34 million to members under 25 years.

“In that next age bracket there were 900 claims that totalled $195 million for members aged 25 to 34,” he said.

“Getting younger members to make a decision about their insurance is critical because they do claim.

“A lot of those younger members are claiming TPD for mental illness conditions that they are getting paid for. They’ll never be able to work for the rest of their life and that insurance is a critical part of their future.”

Fielding noted that only 20% opted into life insurance before the PYS changes and most were older members.

Fielding pointed to his fund’s research that found younger members had the perception that insurers only paid out 50% of claims and that it was important for this age group to trust the life insurance industry.

Fielding said his fund’s research found younger members would have been more engaged if member communications were “loud” and “early”.

When asked how that could be reconciled with the regulator’s guideline that said communications needed to be “neutral”, Fielding said it was difficult to reconcile the two but it was an opportunity to educate the regulators on younger members and then help guide future approaches.



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How very sad for the members and families involved and it is only going to get worse, this will put so much more strain on the public purse. very short sighted move by the Government.

Everybody but the legislators, regulators and so called comsumer advocates saw this disaster coming. Well done Mr Fielding for making this information public knowledge.

This whole process has been so poorly designed by Govt it is negligent.
For those parents of younger super members who have been totally and permanently disabled and require a lifetime of care and expense, you are the victims of a misguided and uninformed legislative mistake.
Not only that, it now comes back to the public purse and the taxpayer to assist these people simply because the insurance cover they had is no longer there.
None of any part of this process should have ever been an Opt In basis.
It should always have been an Opt Out basis, with relevant information and communications spread over at least 12 months.
Losing something valuable you once had through not responding is fraught with potential disaster as we are now seeing evolve.
The language from the regulator around the style of communication is appalling.
The communication should be confronting and clear in relation to the risk of losing or not having any insurance cover.
ASIC want the communication to be " neutral " for the purpose of not being seen to influence a member's decision one way or the other.
What a disgrace from the regulator.
Does the regulator think that any one of these deceased or disabled members families thinks the communication should have been neutral or soft ??, what they are now thinking is that the communication should have been very direct, clear and straightforward regarding the loss of the insurance and the potential associated consequences of not having it in place.
The damage is only starting.
Maybe if an ASIC employee lost a partner, a son or daughter or had to fund the care of a dependent for the rest of their lives when the insurance cover they had could have changed lives, it might actually mean something.
The unintended consequences of poor legislative change and the constant fiddling around with superannuation is destructive.

I hope they band together and sue!!
Stupid ASIC yet again

Agree with all comments. The PYS and PMIF reforms were a short-sighted and arrogant display of the govt and regulator's inexcusable apathy and/or ignorance as to the role insurance plays in the Australian economy and for individual Australians and families.

There is absolutely no excuse for this outcome as industry and Trustee's fought hard to be heard and to demonstrate the importance of insurance only to have things like "the book of death" dismissed, mocked and thrown back in the faces of Australians.

What a lasting legacy to have these families financial burden on your hands Ms O'Dwyer - bravo. For what? A few thousand extra dollars for the rest of us in retirement?

This is the tip of the iceberg for the damage that has been done to the industry and to Australians as a result of this governments embarrassing short-sightedness and ignorance.

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