As the latest figures from Industry Fund Services Insurance Broking (IFS IB) show, AIA remains the country’s largest group insurer across the master trust and industry fund categories, but most remarkable is the size of the pie these days – over $2.3 billion in annual group insurance premiums being paid, as at January 1 this year. The first half of 2010 will be remembered for the introduction of two new group insurance contracts featuring ‘automatic acceptance levels’ – that is, the amount of cover provided without the need for medical evidence – which blew out of the water anything achieved previously by a super fund of comparable size.
In March, white-collar industry fund Care Super emerged with a $1.55 million auto acceptance level (AAL) across death and TPD cover, after negotiations with its incumbent provider of cover, Comminsure. Soon afterwards, AustralianSuper wrote to members offering them a $1.5 million AAL. Apart from the sheer quantum of the cover, another groundbreaking aspect was that these AALs applied until members turned 65.
For many other funds, the AAL still steps down from the time a member reaches their early 30s, although in a market as competitive as today’s, that is likely to change. The jury still seems to be out on whether income protection insurance will catch on as part of a default offering. But another innovation of recent times, the unhooking of TPD cover from death cover to address younger members’ surfeit of the latter, appears to be catching on. The graph from IFS IB shows a number of funds are providing a modest level of default death cover for their under-30s (or under-20s in one case), before the cover dramatically ratchets up once mortgages and babies beckon.