The government will be reviewing the impact of stapling on insurance as part of the Your Future Your Super review said minister for financial services Stephen Jones though he ruled out scrapping it.
Speaking at Investment Magazine’s Group Insurance Dialogue on Tuesday, minister Jones said the unintended consequence of stapling members to their first funds in relation to insurance was inappropriate insurance, loss of insurance and inability to get appropriate insurance.
“We are looking at the impact of stapling on insurance to see whether our fears have been materialised. And if so, what solutions can we put in place to deal with that? So that’s on our agenda.”
But he ruled out abolishing stapling, “I want to be clear that we’re not going to go back to the days pre stapling,” he said.
The government last month announced the review of the Your Future Your Super performance test including the benchmarks around the performance test and the best financial duty.
However, minister Jones reassured the Albanese government understood the importance of group insurance within superannuation after years of regulatory upheaval. “The message that we want to send to industry is one of stability and certainty,” he said.
“We do want to send a clear message that the role of insurance in super, the importance of insurance and super is understood by the government. There is an appropriate role for insurance inside superannuation as an efficient, affordable way of delivering a basic level of life insurance cover to millions of Australians.”
Some 10 million Australians have insurance coverage within their superannuation with $6 billion of claims paid out to over 50,000 claimants.
The government is also focused on rolling out consumer data rights which will be critical to improve customer experience and assist the industry develop suitable products.
“Quality data usage is absolutely critical from a consumer perspective to the consumer experience… and enables [the insurance industry] to design appropriate sustainable products at an affordable price,” said minister Jones.