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  • AIA Australia’s response to KPMG’s ‘Insurance in Superannuation’ report

    Melbourne, Australia, 26 June 2018


    AIA Australia welcomes KPMG’s ‘Insurance in Superannuation’ report into the unintended consequences and significant financial impacts of the proposed Federal Budget reforms, including significantly higher premiums and a failure to address the issue of member balance erosion.

    The KPMG analysis reaches a similar conclusion to a RiceWarner report commissioned by AIA Australia earlier this month, ‘Economic Impact of 2018 Federal Budget Proposed Insurance Changes’, which also raised significant concerns on the validity of the financial benefits of the proposed reforms and the impact of removing insurance cover for those who need it.

    The KPMG report has found that the adoption of all proposed government reforms for young Australians and low balance or inactive accounts would be a 26 per cent rise in premiums for remaining insured members. The unintended consequence of this increase in premiums would be that members would be worse off at retirement with their balance to be eroded by a further 1.2 per cent.

    AIA Australia and New Zealand CEO, Damien Mu, said: “We share the Federal Government’s intention to reduce the unnecessary erosion of retirement balances, but research conducted into this issue is demonstrating that the Australian public will be financially worse off under the proposed reforms. This is not an acceptable outcome even before we consider the serious health risks of being uninsured.”

    “The government should not remove appropriate levels of protection or coverage for active, working Australians, nor should they distinguish between active members due to age or account balances, as these individuals are at risk, and they do have insurance needs as with other member cohorts. Instead, they should be focused on new measures for inactive accounts, which would achieve two-thirds of their targeted cost savings for members, while addressing the important issue of duplicate accounts.”

    Members with active but low balance superannuation accounts do have insurance needs, with more than $75 million in claims paid by AIA Australia to these members in 2017. AIA Australia has also paid $84 million on 1,200 claims for members under 25 since 2015, with the rate of Income Protection (IP) and Total and Permanent Disability (TPD) claims approximately the same for people aged 20 and those aged 30. More than 600,000 young workers under 25 do so on a full-time basis, which is 42 per cent of the under 25 working population. Of those, almost half are full-time workers in blue collar jobs. If the proposed changes were adopted, workers in casual jobs and high-risk occupations such as mining and construction may be unable to attain life insurance, particularly for disability. 

     

    Contact:

    Ingrid Nienaber
    AIA Australia
    T: +61 3 9009 4143
    E: ingrid.nienaber@aia.com

     

    About AIA Australia

    AIA Australia is a leading life insurance specialist with over 45 years’ experience. With a unique customer value proposition focused on life, health and wellness, our purpose is to make a difference in people’s lives.

    AIA Australia offers a range of products that protect and enhance the lives of more than four million Australians. Our vision is to embrace shared value in championing Australia and New Zealand to be the healthiest and most protected nations in the world. With AIA Vitality – the world’s leading scientifically-backed health and wellness program – we help members to live healthier, longer, better lives.

    AIA Australia has been recognised with multiple awards, including being named ANZIIF Life Insurance Company of the Year (2017, 2015, 2013, 2012). 

    Further information at www.aia.com.au. 

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    Copyright © 2021. AIA Group Limited and its subsidiaries or affiliates. All rights reserved. Priority Protection and Priority Protection for Platform Investors products are issued by AIA Australia Limited (ABN 79 004 837 861, AFSL 230043). AIA Vitality, a personalised, science-backed program that supports members every day to make healthier choices, is available with eligible products issued by AIA Australia. AIA Health with AIA Vitality is issued by AIA Health Insurance Pty Ltd ABN 32 611 323 034, a registered private health insurer governed by the Private Health Insurance Act 2007, Private Health Insurance Rules 2007 and the AIA Health Insurance Pty Ltd Fund Rules. The information on this website is current as at 1 April 2021 and may be subject to change. It is general information only and is not intended in any way to be financial, legal, tax, health, medical, nutritional or other advice. You should consider your own personal circumstances and needs and view the relevant product documents, fact sheets, fund rules and terms and conditions before making a decision to acquire such products. If necessary you should obtain professional advice from a financial, tax, medical or health professional. Unless expressly stated, any views or expressions of opinion (including any video content) do not represent the opinion of AIA.
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