POWERED BY MOMENTUM MEDIA
Generosity at the root of disability insurance problems
The Australian disability income insurance sector is continuing to struggle in part because the products being used by both superannuation funds and advisers are too generous, according to a new whitepaper analysis produced by major reinsurer, Gen Re.
The whitepaper, released this week, has outlined the key contributors to the problems around disability income insurance (DII) as being:
- The generosity of the products stifling self-motivation for an early return to work;
- A claims handling approach that shows scars following increased media scrutiny and is based on misunderstood customer-centricity; and
- The eternal hope that a worsening trend will ultimately plateau and rate increases will restore profitability.
The whitepaper said that, contrary to some commonly views, the problems were not being caused solely by more mental health claims, economic factors such as lower interest rates or even the manner in which advisers were being remuneration.
It said that, overall, insurers needed to fundamentally redesign their current DII products, align claims management capabilities with new products and fine-tune the underwriting.
The whitepaper said that DII could be more generous in parts but, overall, had to adhere to simple insurance principles.
“… actuaries must adopt a long-term view,” it said. “With few large players in the market, the myth of first-mover disadvantage disappears. It is time to lead the change and benefit from it.”
Recommended for you
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
37.15 3 y p.a(%)
3
GAM LSA Private Shares AU I
33.96 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
Plato Global Alpha A
28.73 3 y p.a(%)
