Australia’s second-largest super fund is set to select Zurich as its new group insurance provider, shifting its contract away from AIA Australia but retaining key components of its wholly owned internal insurance offering.

An Australian Retirement Trust spokesperson confirmed the redeployment of one of the heated group life market’s most sought-after mandates.

“At Australian Retirement Trust, we want our members to feel safe and confident that insurance in super can help keep them and their family secure, if life doesn’t go to plan,” the spokesperson said in a statement.

“After a competitive tender process that started in July 2024, Australian Retirement Trust has selected Zurich Limited as the preferred insurer for our Super Savings account holders. ART has now entered final contract negotiations with Zurich, and we will keep our members updated once those negotiations are complete.”

ART declined to comment on how much the deal was worth, but its 2024 annual report shows that members were charged $1.125 billion in premiums – up from $974 million in 2023.

The revelation comes ahead of the Investment Magazine Insurance in Super Summit, which will put a spotlight on the social and economic value of this segment of the market, as well as its shortcomings. Regulators have made clear that insurance claims handling processes by funds must continue to improve.

It also comes as new figures released by the Council of Australian Life Insurers (CALI) reveal that insurers paid out more than $2.2 billion in mental health-related claims in 2024, almost double the $1.2 billion figure of five years earlier, and that mental health has become the number one cause of total and permanent disability (TPD) claims, now accounting for almost one in three (31 per cent) claims paid. Meanwhile, one in five income protection claims is due to mental health, with insurers paying out more than $887 million in 2024.

While ART has been on the path of integration and consolidation since the 2022 merger of QSuper and Sunsuper that created it, the fund said that the change to its group insurance arrangements was actually a result of a business-as-usual tender process in response to the approaching end of its contract with AIA rather than a need for further post-merger integration of the two main predecessor funds’ offerings.

Because the fund remains in contract negotiations with Zurich it would not be drawn on the specific reasons it opted to switch, though a reasonable expectation from any new group insurance provider would be a reduction in premiums.

ART says that ART Life Insurance – formerly QInsure, which QSuper established as a wholly-owned subsidiary with an independent board in 2016, prior to the Sunsuper merger – will continue to provide insurance for legacy QSuper members, who hail from the public service and have tailored life insurance arrangements. Zurich will be the go-forward insurer for legacy Sunsuper Super Saver members and new ART members.

While the move to establish QInsure was hailed in the press at the time as “pioneering” and a signal that other funds might also begin to in-house their insurance arrangements, few other funds have followed in QSuper’s footsteps nearly a decade later. And while it was expected by some observers that QInsure’s role might be expanded to cover members across the fund following QSuper’s merger with Sunsuper, that hasn’t come to pass.

QInsure landed QSuper in hot water back in 2021 when it was the subject of a class-action lawsuit brought by Shine Lawyers over allegations it overcharged members for mandatory life insurance premiums. In May this year the fund reached a $67 million out-of-court settlement with no admission of liability.

Being selected as the group insurer for a megafund is a significant win for Zurich, which is headed up in Australia by CEO Justin Delaney, and which in recent years has picked up only a handful of mandates, including from the $34 billion Brighter Super, having been appointed by Brighter predecessor fund Energy Super.

“Zurich is honoured to have been selected by Australian Retirement Trust (ART) as the preferred insurer for its Super Savings account holders,” a Zurich spokesperson said in a statement.

“Group insurance arrangements provide a critical safety net. If the unexpected happens, individuals and families can trust that cover will be there when they need it most.

“Through innovation and partnership, it will be our privilege to help make a difference and deliver an exceptional experience for ART and its members.”

AIA was contacted for comment.

Meanwhile, Hostplus has also announced the extension of its group insurance partnership with MetLife Australia until June 2028, with Hostplus CEO David Elia saying that the partnership would unlock new opportunities to elevate the servicing models across claims and underwriting and deliver stronger outcomes for Hostplus members.

“MetLife has helped Hostplus to offer potentially life-changing and cost-effective group insurance to our members since we first partnered in 2013,” Elia said. “This extension provides a pathway to further strengthen our collaboration and deliver an innovative and enhanced offering to our members.”

Featuring a first-rate agenda, the Insurance in Super Summit on 22 July will spotlight the role of superannuation funds in the nation’s overall healthcare and risk protection settings through its unique insurance settings, while also grappling with the concerns of regulators, the press and general public over claims handling delays.