The report developed by Deloitte, titled “The future of insurance through superannuation”, examined the current system, looking to understand its benefits and to identify opportunities for improvement.

Deloitte found that, while there is room for enhancement, the current insurance through super structure delivers significant value to members and the broader community overall. These benefits include:

 

Along with examining the current landscape as is, Deloitte also modelled the impacts of two improvements to the system – the enhancement of data availability and a greater focus on wellness and return to work.

The report identified improved access to and use of member data as a possible opportunity leading to better value-for-money policies. The findings suggested that giving insurers access to member data such as age, marital status, and number of dependents, would allow them to create more targeted benefits and policy design.

 

An example used in the report demonstrated how reallocating life insurance based on these data points could result in more targeted benefits and lower premiums for members, depending on their individual circumstances.

 

While the projected outcome of improved access to data is promising, in practice, it may prove challenging, as collecting the data needed requires cooperation between government, trustees, insurers, and members.

Effectively, the structure of insurance in super is to provide benefits to those who live with a disability, rather than encourage early intervention and a return to work. However, there is potential for insurers to play a significant role in improving wellness and return to work outcomes for members.

 

Currently, legislation states that financial payments made by insurers must only be for temporary illness/injury (IP) or permanent incapacitation (TPD) and for income and occupational support rather than clinical/medical support. This means that insurers are prevented from intervening early to pay for certain types of treatment that might otherwise help a member recover and return to work more quickly.

 

Should this legislation be reformed, and benefits be expanded, around 82,900 members will be able to return to work over the longer term. This is estimated to yield 7,800 extra full-time equivalent workers by 2062, delivering $1.9 billion in additional GDP and reducing social and other costs by $224 million.

 

If you’d like to know more about the future of insurance through superannuation, read the full report here.