Australian Super has struck a new deal with insurer TAL that will see members total insurance premiums cut by $100 million for the same level of cover. It has also signed up to the new superannuation Code of Practice for the industry, circulated last year, making it the first fund to do so.
The deal, commencing from May this year, will see premiums cut by an average 14 per cent for death cover, 6 per cent for TPD (incapacity) and 20 per cent for Income Protection.
Australian Super said it had used its size and scale to hammer out a deal for members that could not have been matched by individuals.
“This is a great result for our members and demonstrates Australian Super’s commitment to provide the insurance cover at the best possible price for members,” membership executive Rose Kerlin said.
“Insurance through super can be very cost effective and supports thousands of working Australians through tough times in their lives.
“Australian Super offers insurance to members to provide them and their families with peace of mind and support when they need it most.”
The fund stressed it did not pay commissions to advisers or receive commissions from insurers. “This premium reduction will benefit the overwhelming majority of members and no member will have a premium increase,” Ms Kerlin said.
Australian Super provides insurance to 1.4 million of its 2.2 million members, pays around $500 million in premiums each year and expects to pay insurance benefits to 25,000 members over the next five years.
Commenting on the move to sign up to the new industry Code of Practice, Ms Kerlin said AustralianSuper is already working to implement the code across its membership base.
“Australian Super already exceeds many of the minimum standards set out in the Code,” she said.
“Importantly, this includes the majority of service levels outlined in relation to claims, and where we are not up to the Code’s standard we aim to be there by end of 2019 – more than 18 months ahead of the Code’s timetable.
“Overall, default insurance costs equate to around 0.8 per cent of salary over the member’s lifetime in the fund, compared with a code maximum of 1.0 per cent.”
Australian Super, as previously announced, will not sign up members under 25 to default insurance automatically to help prevent fees eroding low account balance for those unlikely to need cover. Workers on very low incomes will also be offered an insurance-free product.
“Another key initiative has been the development of a rehabilitation model that has assisted almost 200 members who were on Income Protection payments to return to the workplace in the past 12 months,” Ms Kerlin said.
Over the past 10 years, Australian Super has paid over $2.6 billion across 45,000 insurance claims to members.