Tasplan COO Nick Connor (Photo: supplied)
Tasplan COO Nick Connor

Tasplan chief operating officer Nick Connor has criticised proposed legislation that would make insurance an opt-in choice for young or low-balance superannuation members, saying the fund’s own data shows the legislation would force it to act against its members’ best interests.

Connor made the comments after announcing Tasplan had switched insurers following an extensive tender process that priced in the changes proposed in the 2018/19 Federal Budget. The multi-industry super fund awarded a group insurance contract worth more than $20 million a year to MetLife. The COO said he did not know of any other funds that had locked in contracts that priced in the proposed budget changes and would not reveal the extent to which the contract had priced in those changes.

An analysis of members’ claims found Tasplan’s loss ratio – which is the amount in claims paid versus premiums collected – has been “much the same” for members aged under 25 and members aged over 25, Connor said.

“What it showed was the claims experience Tasplan has had does not support the budget changes, which were premised on the [idea that] under-25s don’t claim,” Connor said. “If it wasn’t for the legislation, we would not necessarily be removing insurance for under-25s because our data around claims does not support it. The legislation…if it’s passed, forces us to act in a way we can demonstrate from the data is not in the members’ best interest.”

One-size-fits-all legislation is dangerous, he said, as superannuation funds differed widely in the demographics they served and should have the ability to tailor products for their members’ needs.

Tasplan has 145,000 members and $8.8 billion in funds under management.

The announcement of MetLife as Tasplan’s new insurer followed an extensive tender process involving five hopefuls, including the fund’s long-serving insurer, CommInsure.

Each was weighed on a range of criteria, with price given the most weighting, Connor said.

“But all the tenders were very, very close on price – inside 7 per cent variance,” he said. “MetLife, on balance across all the criteria, scored highest, but it was a very close thing.”

Beyond price, he explained, MetLife demonstrated it had done much background research into Tasplan and its business strategy.

“They fit their value proposition into how they could support our strategy…and they articulated that well,” Connor said.

MetLife also had a completely modernised digital offering, which provided features allowing members to follow the progress of claims.

The proposed budget changes, the Insurance in Superannuation Voluntary Code of Practice, and potentially further changes coming out of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, were forcing funds across the industry to re-consider their insurance offerings, Connor said.

Last week Assistant Treasurer Stuart Robert said he was determined the government’s controversial superannuation overhaul would be finalised by “the end of November”.  Long-time critic of the reforms AIA Australia chief executive Damien Mu told Investment Magazine he had “real concerns” over the reforms and said they were passed the insurer would “continue to fight” them.

Some would go to tender, as Tasplan has done, he predicted, but others might see it as too much of a drain on capital and other resources.

“I think everybody is putting a lot of thought into their insurance offering, but I don’t think the industry has enough capacity for everyone to go out to tender,” Connor said. “I would suspect that some people will sit with their existing relationships and redesign their products and pricing with their existing insurers with a view of going to tender sometime in the future when the dust settles.”

There is currently only one major super fund tender in play, with uncertainty over the super reforms slowing the number of tenders on the market according to Rice Warner.

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