Bresnahan lamented the lack of education and member awareness around the level of insurance they are paying for in a default option. Watson pointed out while members and their families may not be engaged with insurance now, come the time of an injury or death, their focus on it will be acute. “It’s then that the utility and benefit of a good, well-considered and modelled default benefit will be evident and this more than nearly any other role of the trustee will positively affect people’s lives.”

Watson also presented research which would appear to confer with Bresnahan’s comments on some exorbitant default insurance levels. ARIA’s group insurer, AIG, commissioned Rice Warner Actuaries to research appropriate levels of cover for various age groups.

If Rice Warner’s recommendations for minimum default cover were to be graphed, they would be best described as a bell curve from the youngest to oldest ages, Watson said. This is completely different to the typically linear, downward slope of most funds’ benefit design, including that of ARIA.

The deputy CEO added that ARIA had entered its group insurance review with AIG last month with a “particular goal of determining the extent of the underinsurance level faced by our members”.

However, the fund discovered that while many older members were not adequately covered by default arrangements, younger members were often over-insured when compared against the Rice Warner recommendations. Watson said changes to the default benefit design were underway.