Working with doctors and administrators to improve the group insurance experience

Group insurance is coming of age in Australia. It was only a decade ago that the most group cover one could hope for from a personal statement (that is, not requiring any medical tests) was about $300,000. Today, that cover can be more like $1,000,000, and the form is a lot shorter to boot.

MICHAEL BAILEY looks at the work that super funds, their administrators and insurers have done to achieve such advances, and the technological and process enhancements that continue to be made in an effort to rouse Australians from their ambivalence towards death, total permanent disablement and salary continuance insurance.

The Investment & Financial Services Association (IFSA) introduced ‘Lifewise’ last month, an initiative aimed at encouraging Australians to consider their insurance needs. The need to do something is palpable. IFSA has found that the average life insurance payout in Australia is just over $90,000, funnily enough, about what you get from a default single unit of cover in most industry funds.

The Sydney launch of Lifewise was a memorable event on several levels. The stories told by two men who had claimed on their insurance policies were harrowing to say the least. One tends to relate an insurance claim to being involved in an accident, however the father who slipped into depression after his daughter was killed in a boat crash on Sydney Harbour was a reminder that life really can be too cruel and unpredictable to live it uninsured.

Another impressive aspect of the launch was that on the same panel alongside the brave insurance beneficiaries sat representatives from both the retail and group insurance camps. In the past, group insurance was seen as an annoyance by the established life companies.

The conventional wisdom went that people glimpsed something about one or two units of death and TPD cover in their super fund member statement, and assumed that was insurance taken care of. Retail insurers also worried that the proliferation of nominal default insurance coverage through group policies was cementing retail life’s reputation as something that had to be sold aggressively to people, rather than embraced by them.

The structure of the Lifewise event indicated something of a rapprochement between the two insurance streams, as Colin McGuinness, the strategic projects manager for industry fund Auscoal, received equal airtime to Jim Minto, the managing director of Tower Australia. Of course, Minto is not alone among insurance executives who’ve seen their group risk premium inflow grow at least as fast, if not faster, than their book of retail, intermediated premiums in recent years.

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