Following the recent consultation announced by the FSC, the Federal Government has now announced its own consultation around issues associated with occupational loadings on default super fund group insurance offers (see: Industry Initiative on Occupational Exclusions).
A statement from Senator Jane Hume, the Minister for Superannuation, Financial Services and the Digital Economy, says the Government consultation is to inform a review into occupational exclusions in default insurance in MySuper products, “…with a view to determining the appropriateness of such exclusions going forward.”
It says that occupational exclusions mean that default insurance cover is not available (or only partial cover is available) for certain occupations that an insurer has classified as higher risk.
“Occupational exclusions in default insurance policies affect the automatic acceptance of default cover for some new MySuper members and may also have significant consequences where a member changes occupation.”
The statement says the review will focus on default cover in respect of life and TPD insurance which trustees are required to provide to their MySuper members.
It adds that the objective of the consultation is “…to canvas views from interested parties on the extent of the problem arising from occupational exclusions for new members and for members changing jobs and what options, if any, may be required for changes to the current regulatory framework.”
The statement concludes that default insurance offered through MySuper products “…should come with no surprises. This review will look at the prevalence of occupational exclusions on default life and TPD insurance offerings within MySuper products to form a view of whether occupational exclusions in relation to default life and TPD insurance in MySuper products are necessary or appropriate.”
The consultation paper is available here and submissions close on 14 October 2021.
