The survival of group insurance depends on funds, trustees, regulators and insurers working as a team, says Michael Dwyer, chief executive of First State Super, as none individually has the answer.

The risk is that the youngest and healthiest members will exit insurance cover in response to large hikes in premiums, impacting further on the sustainability of pricing.

Dwyer, whose own fund has seen general premium increases of 33-34 per cent across several membership groups, is chairing a discussion on this topic at the Group Insurance Summit on August 20.

The session includes Richard Weatherhead, head of insurance at Australian Super; Greg Brunner, general manager, supervisory support division, APRA and Damien Mu, acting chief executive of AIA.

“I don’t think anybody has got the one answer. We are going to have to work through the options available,” said Dwyer.

“With increased premiums of 50-100 per cent, those are the sort of increases that make people sit up and take notice,” he said, adding if members seeing these increases on their statements did not act, there was still a risk of parents advising children living at home who had started work to opt out.

He believes engaging members on the value of group insurance cover has never been more important.

“We have an educational role to make sure they do not withdraw from insurance at the wrong time in their lives.”

Elsewhere, he foresees stricter rules for TPD to curb premium rises.

“There will be greater scrutiny on the contracts and the definitions that underpin the offering, as well as the levels of offer,” he predicts.

He also foresees workers in occupations with the highest premium rises, seeking compensation from their employer.

“A number of occupations that pose a higher insurance risk may choose to sit down with their employer and negotiate part of their conditions of employment including wages and holiday.

“They might say ‘because of the nature of my occupations, I would like my employer to pay these costs, because it is not my fault because of the occupation’.”

Michael Dwyer 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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