Super funds are taking a step back to review the original purpose of insurance within super, in a bid to recreate a sustainable and relevant offerings for members, says AIA Australia’s newly appointed chief executive Damien Mu.

Funds are responding after seeing insurance premiums rise from the third or fourth biggest cost to members, to become the second and in some cases the biggest cost as benefits have increased along with claims, impacting premium rates.

Over the last 12 months Mu is reporting greater manpower being used by funds and insurers to rethink and manage their insurance offerings and to deal with the new SPS250 regulation, which has given funds greater requirements to be active in managing insurance.

He believes that some of this extra work will stay in the industry as many funds move from traditional three year insurance reviews to two year reviews and in some cases one year reviews.

“Most clients have moved to a far more regular review cycle of benefits and experience to track, monitor and look for improvement ahead of more regular rate guarantee periods to ensure the right balance between cost and member benefits,” he said.

Though not all funds were changing their models. “There will be some who actively review their insurance to tailor it to suit their membership profile and demographics and some funds that go for a very vanilla offering,” he said. “We are seeing funds at varying stages, as some have been more active over a longer period of time.”

Where changes were happening he saw the introduction of lifestage benefit designs, lower TPD benefits, changes to definitions, greater income protection, as well as tightening of eligibility and automatic levels of cover.

He added: “A genuine focus on claims management, including rehabilitation, was a key priority to assisting both the claimant experience and managing the premiums over time and some exciting developments and progress had been made”.

He foresaw an eventual easing off of some claims, as the current trend of back-dated claims worked its way through the system, but acknowledged a higher level of claims from increased awareness and economic conditions is likely to stay.

He added: “Let’s remember that group insurance has been a fantastic and efficient vehicle to afford millions of Australians cover who ordinarily would not have had any cover, so it is incumbent on us to get it right.”

Mu assumes the chief executive role on August 1. On that date the current chief executive Peter Crewe, will take up the role of chief executive, group corporate solutions of AIA Group in Hong Kong.

Mu has been with AIA Australia for seven years and most recently led the successful deployment of AIA Vitality, AIA’s new health and wellness program, in Australia.

Damien Mu will be speaking at the annual Group Insurance Summit, being held at the Four Seasons Hotel, Sydney on August 20. To find out more on the conference or to register to attend, click here.

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