Early withdrawal from super and loss of insurance cover during the pandemic has put the onus on insurers to restore confidence in the super system say TAL Australia chief executive Brett Clark and AIA Australia and New Zealand chief Damien Mu.
Latest Australian Treasury estimates show 560,000 Australians emptied their super accounts and lost default insurance as a result of taking advantage of the early-access to super scheme to provide income throughout the Covid-19 pandemic.
“What I’d like to put on the table is confidence. When (Australians) are confident, they engage and make good decisions for themselves and their families,’’ Clark said.
“[If they don’t] they may withdraw super so they have no insurance cover in the middle of a pandemic, which doesn’t sound like to great decision.
“If members don’t have confidence then they may make these decisions. We all have obligations on this.’’
Speaking at Investment Magazine’s Group Insurance Summit on the topic Insurance in the limelight: enhancing education and engagement, Clark said he had to be agile to deal with the issues and look for opportunities for the industry in the past five months.
“There’s been no manual and no opportunity to have a dry run. We’ve been learning on the go,’’ Clark said.
“Agility’s been important, more than ever, to stay a bit in the present; in the moment. Present on the issues and present for the opportunities. That’s where I’ve tried to be as a leader.”
A poll of the Summit’s audience agreed with Clark – 27 per cent strongly agreed and 37 per cent agreed – that withdrawal of super has undermined confidence in the super system.
Mu said insurers had responsibility to provide confidence, but he urged care on passing judgement on people who had withdrawn money early.
“Let’s be careful not to pass judgement in these situations. It is what it is,’’ Mu said.
“On early release, how do you judge that? … people are in survival mode. The first thing that has to happen in a pandemic is that we have to survive.”
He said insurers now needed to adapt and learn from the situation.
“Unfortunately I think as a result of the hundred of thousands of Australians who have lost their cover and up to close to one million have lost cover under changes to (accounts) under $6000 and under 25s,’’ Mu said.
“We’re in a situation where it’s important that the confidence is restored quickly so people think about their insurance before they withdraw super or keep insurance going if they need it.”
Meanwhile ADL requirements for Total and Permanent Disability (TPD) claims, described by corporate watchdog ASIC as junk insurance in super for many, was a good example of where the industry has a challenge to do better, said Clark
But he stressed that ADL-dependent claims represented two per cent of overall claims and that 91 per cent of TPD claims were paid with 85 cents in the dollar is returned to members as claims.
“How do we change this insurance to help people who are no longer employed. Let’s do this in a calm and informed way,’’ Clark said.
On super fund mergers, there had been a natural evolution of mergers of funds to provide scale of efficiency and cost in the past few years and was good for investments, but this should not be at the expense of simplicity for members, he said.
AIA Australia’s chief said some aspects of the industry had changed forever in response to Covid-19.
“The important thing is to remind ourselves of our purpose. It was a real time of putting down differences of opinions against a common issue,’’ Mu said.
“I’m an optimist … what we will all see is (that) this will create great flexibility in work practice. I won’t take 150 flights a year again; won’t be five days in the office again.
“When we look at some of the research of silver linings anxiety levels have increased 70 per cent being at home but on the other end, we’re healthier, walking more and cooking more with family at home.”