HESTA Super Fund’s decision to appoint CommInsure as its group insurer will significantly boost the risk business’ premium income.
HESTA confirmed yesterday that CommInsure had ousted incumbent provider OnePath in the tender for the $17 billion fund’s group insurance contract.
The deal will see HESTA members provided with default income protection until age 67 and significantly boost life cover for middle-aged members from 2012.
Anne-Marie Corboy, CEO of HESTA, said the typical HESTA member was a female in her 40s with a balance of $9,000. These members aimed to continue working for as long as possible, Corboy said, and under the new arrangement would receive income protection until they bacame eligible for pension benefits.
She said 40-year-old members would receive a 25 per cent increase in their life insurance benefit, while 50-year-old member would be entitled to a 74 per cent increase.
For CommInsure, the deal restores some of the premium income lost in 2009 when, as the incumbent insurer, it lost to Tower in the contest for AustralianSuper’s group risk contract.
According to research company Dexx&R, CommInsure garnered $331 million in in-force premiums in the year to December 2010 and held 11.6 per cent market share to rank fourth, behind AIA Australia, Tower and OnePath, in both in-force premiums and market share.
HESTA’s 2009-10 annual report showed the fund paid about $91 million to OnePath during the year. If it continues to pay a similar amount, CommInsure’s annual in-force premium should rise above $400 million in the coming year.