A 150 per cent increase in premiums in three years has led to new options being developed including rehabilitation of members and the halting of selection against Media Super.
Michael Rooney, deputy chief executive officer of Media Super, said the historical methods weren’t sustainable as the fund has experienced a 70 per cent increase in premiums in 2012 and an 80 per cent increase in 2015.
He told delegates at the Australian Institute of Superannuation Trustees’ (AIST) Insurance Ideas Exchange Program in Sydney on Wednesday, that as every fund is getting increases Media Super could probably have marketed the premium rise as “just life”, but that would not have helped the fund in the long run because it did not fix the problem as to why bad claims are being paid.
“We want to break the cycle of three year increases in premiums,” Rooney said.
He added the best interests of the member was not being served through the process of lump sums being paid out based on the subjective assessment of whether they were likely or not to be able to return to work.
“It’s something we’ve all been negligent in dealing with and I think the change of process, looking at someone’s rehabilitation rather than looking first at their disability, is an important step forward in ensuring the member is looked after,” Rooney said.
He gave the example of a 26 year-old whose elbow injury meant he couldn’t work in boiler construction any more. While he could no longer continue in his previous occupation, making him a candidate of total and permanent disability lump sum payout, through rehabilitation and training he was able to pursue another career as a project manager.
Media Super has also re-negotiated the conditions which allowed selection against the fund.
The fund had been offering an additional unit of coverage above the default, for no charge, if a new member selected it within 60 days. Of those that selected this option 16 to 20 per cent claimed within two years, meaning the people taking that benefit were likely those who already had a condition and were interested in insurance.
“Most people when joining employment don’t think too much about what’s my insurance level at the time. So what we were doing was allowing members with conditions to select against the other members and have a bigger payout within two years at the cost of all the other members in the fund. We are removing that in the new arrangements,” Rooney said.
