When Media Super switched from ING’s One Path last December to Hanover Insurance Group, it ended a relationship that began in 2008.
At the time, One Path was the group insurer for Just Super, which merged with Print Super into Media Super, a $3 billion industry fund that primarily attracts workers in the media and creative or digital sectors.
While industry funds such as Media Super tend to review their insurance options every three years, they don’t necessarily go to market. The last time Media Super underwent a tender was 2009. But this time was different, says Michael Rooney, who is acting chief executive of Media Super until Graeme Russell assumes the post at the end of March this year.
First, there’s been a hike in premiums, which Rooney attributes to an unexpected, and quite substantial, increase in claims across the board in the last three years. He says it’s not uncommon during a market downturn to see an increase in disablement claims. But there has been another major shift that took the fund by surprise.
“One thing that’s really been quite significant compared to historical figures in our fund has been the increase in claims on cancer, so it’s not something that you could attribute to the market conditions. It’s quite unusual.”
The figures are relatively new, but Rooney says the fund investigated internally to understand the phenomenon, and to determine whether it’s primarily in a specific market. “We’ve found that it’s actually across the board. There’s been a proportionate increase in all funds, so it’s not a particular job type… We are talking further to our insurers as well to keep monitoring and try to get a better understanding over the course of this policy, so that we can better understand going forward as well.”
Rooney believes increased awareness of member entitlements post-GFC has also contributed to the higher claim numbers, including members claiming benefits for older injuries. “The ability to put a claim in is there and we have seen a number of very, very old claims being paid over the last couple of years.”
Meanwhile, overly competitive pricing in the last 18 years means there’s greater focus on ensuring insurance is more sustainable than cheap. “You want the best price for your members obviously, but you want the best sustainable price,” Rooney says, noting that insurers can drop out of the market if they discount too heavily and competition drops.
“Competition will always keep the price at a reasonable level, but I think the sustainability is also important to ensure we keep that competition in the market.”
On sustainability, Rooney says a better balance is being achieved. Of its 2009 tender, Rooney says the fund received a substantial discount, and it suspected that the price was unsustainable.
“If they’re prepared to cover members for that price, you take it, even if it’s only for three years, because that’s what the market at the time was prepared to charge for it,” he says.
“But in the back of our minds and a couple of conversations we had at the time, we felt it was overly competitive and an unsustainable price in the long term. I’m hoping that this round will see much better and more sustainable pricing, which I think will be good for the industry in the long term.”
Meanwhile, there are other noticeable differences in the current tender rounds. A more attentive insurer is one observation Rooney makes about the tender process. “The market’s been extremely competitive and cutting costs for a long, long time, but they’re now starting to see that they need to take a more realistic and holistic approach to their offering, and ensure that they’re taking into consideration all the information they possibly can to make the pricing right.”
The process is also more complex, but it’s not insurers complicating things, says Rooney. It’s that funds see insurance as a clear point of difference, particularly with a large proportion of members taking default options, and with the introduction of My Super.
Members also require more customised insurance coverage. “When I first got involved in superannuation and insurance, you had a very basic policy, very basic definitions and everyone offered much the same,” says Rooney. “Today, we cover a lot of freelancers who are actors and journalists, for example, and they have special needs.”
For example, journalists working overseas may have restrictions, but Media Super’s policy has been tweaked to allow them insurance coverage. “You’re looking for that difference and ensuring that the cover meets the requirements of the membership that you’re attracting.”