SunSuper has awarded its $160 million-per-year group insurance contract to AIA Australia, but jilted incumbent, Suncorp Life, has shrugged off the end of the 23-year marriage by saying the impact to its overall business will be less than 2 per cent.
While Suncorp’s executive manager group risk, Michael Back, was not available for comment yesterday, a Suncorp spokesperson said “the transfer of the SunSuper tender to AIA will have no material impact on Suncorp Life, as the embedded value of our business will be affected by less than 2 per cent”.
“While it is clear that Suncorp Life’s bid was very strong, we have always been clear that we only want this business if it is priced on a sustainable basis,” the spokesperson added.
SunSuper, the country’s fifth largest fund has $17 billion under management and 1 million members, of which 800,000 will be covered in the $160 million mandate (the remaining 200,000 are covered under corporate and legacy plans).
The last major review of the group risk provider was five years ago, said SunSuper’s CEO, Tony Lally. “A Request For Proposal went out two months ago, and there were two rounds so all parties had the opportunity to submit their best offers. Everyone was treated equally.”
Suncorp Life defended its loss by saying its “clear strategy has been to drive to a leadership position in the IFA (independent financial adviser) market, and establish a direct business of scale”, according to the spokesperson.
“We are growing strongly in both these channels and will continue pursuing this clear and focused strategy. Suncorp Life will continue to serve our other group risk customers and will review our strategy in the group risk market focusing where opportunities are profitable and sustainable.
“We have had a long and close relationship with SunSuper for 23 years and we wish them well,” the spokesperson said.
With the mandate going to AIA Australia, the country’s largest provider of group life insurance, SunSuper members would be 38 per cent better off overall, Tony Lally said, and women in particular would be 50 per cent better off.
Formerly, female members had paid $3 a week in premiums, but now that would range from 80 cents to $4 a week depending on the woman’s age and life events.
“SunSuper is the only industry fund to offer gender-based rates,” Lally said. “In the interests of equity, we offer better rates to females because they live longer.”