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Group risk services may be unsustainable
As the group risk sector begins to see increasing auto-acceptance levels (AAL), concerns have risen about how funds will meet members’ needs in the future.
Damien Mu, chief distribution and marketing officer at AIA, told delegates of the Conference of Major Superannuation Funds (CMSF) he was worried that it was an unsustainable model.
“My concern is: when is the tipping point? We can’t just keep adding things on there and hope for the best. There comes a time when we need to step back and look at how we are meeting members’ needs,” Mu said.
He said that members were currently getting the benefit of not needing to go through the underwriting process, but he warned the claims impacts for insurers would play out in the next few years.
“As an industry we need to be mindful of the potential impact that auto-acceptance will have,” he said.
Mu was not the only one concerned about the sustainability of AAL.
Robin Knight, head of group market and actuarial at OnePath, told delegates he was concerned about problems of uninsurable people taking advantage of AAL.
“The worry is that you will get people joining industry super funds just to get access to these high auto-acceptance levels,” Knight said.
“We could have many latent claims sitting there that are going to emerge and which will be paid for by the ordinary membership,” he said.
AUTHOR
Ashleigh McIntyre
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