Will CFS dump CommInsure as its group insurer?

Colonial First State (CFS) continued to use CommInsure as its group insurer even though it was not ranked amongst the best providers in terms of premium costs, the Royal Commission has been told.

However, CFS executive general manager, Linda Elkins signalled that the status of CommInsure as provider of group insurance to the funds was now under review.

Counsel assisting the Royal Commission, Michael Hodge QC pointed Elkins to work undertaken by actuarial consultancy Rice Warner and said it suggested that it showed that CommInsure often ranked worse that the median and that where it did better than the median, it only did a little better.

Related News:

Asked whether the Commission could draw any conclusions about the adequacy of the supposedly arm’s length negotiations between CFS and CommInsure, Elkins said this was not necessarily the case.

“I think the role of the product manager is to do the benchmarking, do the annual reviews. That’s overseen by the office of the trustee as well. Then to come to a conclusion as to whether we’re better off – again, this is a position of incumbency,” Elkins said.

“The question becomes are we better off to negotiate with the incumbent insurer where we see these weaknesses or are we better off to change insurer. And on balance the decision that has been made is to negotiate with the incumbent insurer, but this benchmarking would inform that negotiation.”

Asked by Hodge whether there had ever been any serious discussion at board level about the possibility that Colonial would cease to use CommInsure, Elkins said that there had been.

She said that, more recently, the sale of CommInsure to AIA had been informing the board’s views.




Related Content

APRA sets life insurers 8 week deadline on disability insurance

The Australian Prudential Regulation Authority (APRA) has sent a strong warning to life insurers that they need to urgently address concerns about the...Read more

We were right to sell AMP Life says Murray

AMP Limited’s financial results and the actions of other owners of life insurance businesses have validated the company’s decision to sell its lif...Read more

ANZ P&I deal with IOOF on track, with caveat

Despite the fall-out from the Royal Commission, ANZ and IOOF appear to be on track to complete the sale of the ANZ OnePath Pensions and Investment bus...Read more

Author

Comments

Comments

No chance that the CFS review of Comminsure would be happening without the Royal Commission happening.

Add new comment