Is Govt risking opening up insurance gap?
New research has confirmed that the Federal Government risks increasing Australia's insurance gap via its legislative changes to insurance inside superannuation, with only around half of Australians knowing they have life insurance cover as a result of being a superannuation fund member.
The research, commissioned by MLC Life Insurance and carried out by research firm, Kantar, also confirmed the degree to which it has been those superannuation funds which have maintained strong communications with members which have seen the most numbers opting to maintain their insurance despite the Government’s Protecting Your Super legislation.
The research found that life insurance within superannuation funds was not top of mind for members, with only a quarter of respondents saying they had life insurance and with that number rising to 44 per cent when they were prompted.
However, the research also showed that among the top 12 biggest super funds, between 36 and 61 per cent of respondents were sure their funds included life insurance.
Importantly, 55 per cent of all superannuation fund members surveyed said they saw value in having life insurance as part of their superannuation.
Commenting on the outcome of the research, MLC Life chief of Group and Retail Partners, Sean McCormack, said he was actually heartened by the fact that nearly half of super fund members were aware of insurance inside superannuation and had heard of the PYS package.
“I think there are signs in this research that we might be making a little bit of progress,” he said.
On the question of dealing with informing superannuation fund members about the implications of the PYS legislation, McCormack said that MLC Life had worked with a number of its superannuation fund clients and had found that a holistic approach to member communications had worked.
He said that when members had been contacted across multiple channels – multiple letters, e-mails, phone calls and digital – it saw an opt-in rate of over 40 per cent.
However, when members had only been contacted via a single channel, that opt-in rate had dropped significantly to around 10 per cent to 20 per cent.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
