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Insurance under superannuation threat
Superannuation members may end up under-insured if the Government's interpretation of all default members as MySuper members continues, according to Vicki Doyle, Suncorp Life Australia's executive general manager for direct customer.
Doyle said many super members had multiple accounts in order to hang on to insurance policies they had held for a period of time. She said auto-consolidation of default accounts could mean some members lose their policies.
"I think as an industry we have to preserve that because we certainly can't go into a further under-insurance position for Australians," she said.
Pauline Vamos, president of the Association of Superannuation Funds of Australia (ASFA), said ASFA was still fighting the Government's interpretation of what a MySuper member was. She said even if a fund could identify members who had specifically chosen the default fund, they would need to be pushed across to a MySuper option.
"I think it's a ticking time-bomb. I think our duties as the board and the trustee are the best interest of members. I think that's going to be a very hard test to demonstrate that," Doyle said.
She said Suncorp was well on its way to implementing Stronger Super changes but still had a few insurance hurdles to face such as grandfathering, which would change the whole nature of group insurance because policies were designed and priced for particular demographics.
"If we then grandfather that for everyone that you auto-consolidate, they come in as individual members and effectively we're on an individual price basis," she said.
Doyle said Suncorp would need to contact members individually before the board decided what to do with members who had not given an indication of what to do with their insurance.
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