The abolition of controversial occupational exclusions is firmly in the government’s sites with confirmation Treasury has committed to undertake a review into occupational exclusions in default insurance associated with MySuper products.
The planned review, included in the government’s Your Future, Your Super final regulation explanatory statement, has been announced as funds start moving to remove those restrictions in an effort to avoid PR and reputation risks, according to Jenni Baxter, a partner with Deloitte, who will be speaking on the topic at Investment Magazine’s Group Insurance Summit on Tuesday.
The potential for employees to be left with inappropriate insurance offerings for their occupation was the most pressing issue outlined in the 21 submissions received in response to the public consultation on the Your Future, Your Super draft regulations and explanatory materials back in April/May alongside the concerns raised about whether underperforming funds should be excluded from being stapled funds, Treasury noted in its final regs release in August.
The Financial Services Council followed Treasury’s commitment to review occupational exclusions in default insurance associated with MySuper products by publishing a policy paper and consultation calling for occupational clauses to be abolished.
Occupational exclusions within MySuper products are perhaps more prevalent than many think, Baxter noted in advance of the Group Insurance Summit session in which she will be joined on a panel by Cbus Super head of insurance, Noel Lacey.
“We recently considered 20 leading super funds which account for about 80 per cent of the MySuper accounts and we found only six funds did not have some form of default insurance restrictions for high risk occupations which extended to complete ineligibility for any IP or TPD cover limits on benefit periods, or a more restrictive definition or caps to some cover amounts. So it is more common than you might think,” Baxter outlined.
Funds have already begun to start removing or making plans to start removing occupational exclusions, Baxter highlighted.
“I know one fund we work with that has already said ‘we’re going to remove occupational exclusions and we want to be one of the first to market to say that we’ve done that’,” Baxter said.
“I suspect we’ll see funds starting to remove those restrictions, because it’s a terrible PR risk, a reputation risk for the fund and it’s a pricing risk also,” she said.
Baxter has welcomed the government’s planned review into occupational exclusions.
“I think it’s required. I think there is enough data and research to support the review being necessary because I think there is a need for careful consideration of cover for high risk occupations and the number of restrictions are quite common often excluding them from cover,” she said.