Is TPD within super sustainable?
Superannuation funds may be forced to largely exit the provision of Total and Permanent Disability (TPD) insurance in its current form.
That is the assessment of key superannuation fund chief executives, and they attribute much of the problem to highly active lawyers pursuing new revenue sources following legislative changes to Workers' Compensation arrangements.
A Super Review roundtable, conducted last week, confirmed the degree to which superannuation funds were both reviewing their insurance offerings and, in many instances, substantially rewriting their TPD definitions.
MTAA Super chief executive, Leeanne Turner, acknowledged the problematic status of TPD cover had been at the forefront of her fund's review of its insurance arrangements and noted that, ultimately, the fund had placed an emphasis on death benefits over TPD.
ClubPlus chief executive, Paul Cahill, agreed with Turner and said he believed TPD had become a risk in the market.
"It is seriously a risk because of two things: One, the shutting down of the workers' comp bit has meant lawyers are now looking for a new avenue for money... and funds are going to say this is all too hard or the rates are just going to sky-rocket, and the members of the fund who are in there for the right reasons are going to get penalised," he said.
"In the end funds are going to have to drop TPD," Cahill said.
The roundtable had earlier agreed that while financial planners may have been directing clients towards particular industry superannuation funds because of the attractiveness of their insurance offerings, this was becoming less possible as the funds tightened their insurance definitions and automatic acceptance limits.
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