Super Fund to Reduce Premiums by $100 Million

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AustralianSuper will reduce risk insurance premiums for its members by up to 20 per cent and reduce the overall levels of premiums paid by $100 million over the next financial year.

AustralianSuper Group Executive of Membership, Rose Kerlin

The fund stated that insurance premiums for members would decrease from May this year by an average of 14 per cent for death cover, 6 per cent for TPD and 20 per cent for Income Protection, after the fund conducted its annual premium review.

The overall reduction will result in 16 per cent reduction in total premiums paid by AustralianSuper which will drop from $600 million in the current financial year to $500 million for the 2019 financial year.

AustralianSuper commented that it was able to make the reduction due to the size of the fund, which has 1.4 million members with some form of insurance from its total pool of 2.2 million members, when negotiating bulk rates with its insurer, TAL.

The fund also has a Premium Adjustment Model in place with TAL which takes into account claims experience over the past year and allows it to reduce premiums where possible.

Group Executive of Membership, Rose Kerlin, said the premium reduction would apply to the Industry Division of the fund and there would be no premiums increases for any members or changes in their level of cover or definitions within the insurance offered.

Earlier this year, the fund announced it would be offering superannuation without default insurance to short term employees to avoid erosion of fund balances due to insurance premiums (see: Super Fund Removes Insurance From New Product Offering).



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7 COMMENTS

  1. I’d like to know what definition changes accompanied the premium reduction and whether they will advertise that?

    • Nick, I checked that with AustralianSuper and they indicated no change to definitions, levels of cover or premiums. The story has been updated to reflect that information.

      • Thanks Jason. That’s massive to reduce with no definition change. Last change, which was bad, must have pulled claims Back substantially. It really is a poor definition compared to others.
        Cheers

        Nicholas Hatherly
        Managing Director
        Australian Financial Risk Management

  2. And here we go again…TAL must have knowledge of the fact that the GFC has claimed all those in the group who were going to claim. Also how interesting that retail cover is increasing due to claims but group is now on the way down…what is the real reason of declining premiums? Is the retail sector funding this or has there been further changes to definitions that are applied retrospectively??? Something smells.

  3. How can group insurance decrease by this amount yet retail insurance has increased by a similar amount and more. Are group policy holders healthier and less likely to claim?….or just less likely to claim? maybe because of limiting definitions? Perhaps someone could write an article pointing out the differences, good and bad, in group and retail policies to compliment this article.

    • I think the reduction is an after effect of the significant increases that industry funds put through after profitability issues observed by the industry in 2013-2014. From memory most industry funds put through increases of 80%, so in reality the reduction of 20% is probably an adjustment of over conservative pricing.

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