Group insurance needs to move away from total and permanent disability (TPD) lump sum payment to income replacement and rehabilitation, a variety of insurance experts agree.

There is a desire, coming from multiple quarters of the industry, do this as it is more sustainable for business and gives a better outcome to members

“Rather than being a claims service, accepting the claim and paying it out, we play a more fundamental role through that process of helping that person get back to work. It’s a far more direct purpose and offering,” Damien Mu, chief executive of AIA Insurance, said.

For this to happen customer research needs to become dynamic as opposed to periodic with funds, insurers and reinsurers working to collaboratively to explore the consumer movement and its role in superannuation.

For example, insurance claims through super with a legal firm attached have jumped to around 35 per cent. Mu hypothesises part of the reason is people perceive the claims process as difficult and complex and the legal firms have stepped in via a marked increase in advertising, but says more understanding is needed.

“Ultimately insurance has got to engage with members in a way they choose to be engaged. It’s no use having a great benefit and a great option but it’s not something members are looking at and not in the way they choose to engage,” Mu said.

Engagement with members is often talked about as being key component to a solution, but Mu said it needs to be further reaching, encompassing medics, doctors and treating professionals. This is to make sure products focused on income protection and rehabilitation have the right design and don’t have any gaps in terms of unintended consequences, eligibility requirements, and that the members are clear what they’ve taken up.

Jenni Baxter, senior consultant at Rice Warner, said some funds have already reduced TPD and increased income protection while Ian Fryer, head of research at Chant West, takes the pragmatic view that even if insurers are moving to rehabilitation out of a solely profit motive, the end result for members is a win.


Damien Mu, AIA Insurance, will both be presenting at the Leaders panel – the road ahead for group insurance session at the 4th annual Group Insurance Summit on August 19, 2015.

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