Vulnerable members at risk of losing insurance cover

• The measures targeting under 25s don’t materially address the erosion of superannuation balances.
• The reforms will cost the Government and Australian economy $2.46 billion annually. The Government will also only experience marginal tax revenue gains of just $29.9 million each year.
• There are significant sustainability risks to the group insurance system.
• Some members will be shut out of the group insurance system.
• Potential impacts to cover for up to 7 million Australians – almost half of all who are currently insured.

We remain concerned about the removal of coverage for members who are active but with low balances – a group that do have insurance needs, with more than $75 million in claims paid by AIA to these members in 2017. We do not believe the Government should remove protection for active, working Australians, nor distinguish between active members due to age or account balance as they have similar needs.

The Productivity Commission’s recent ‘Superannuation: Assessing Efficiency and Competitiveness’ report labelled duplicate insurance but we strongly believe the Government can achieve this by mandating some of the measures outlined in the Insurance in Superannuation Working Group Voluntary Code of Practice.

We will continue to lobby Government, including our appearance at the Senate Economics Legislative Committee hearing on 20^th July – and remain hopeful that sensible changes, which include extending the transition timeframe, are made to the proposed reforms. The Committee is expected to report by 13^th August. and we'll keep you updated.

You can read AIA’s submission to the Committee here. For more information contact Tom Gordon tom.gordon@aia.com or speak to your Client Development Manager.