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Industry funds impact group insurers
Industry funds consolidation and price shopping could have a dramatic influence on the offerings of group insurers, according to MLC insurance executive general manager Andrew Hagger.
It was crucial to price well because this was identified by fellow insurance industry participants as the factor industry funds were most likely to look for when selecting a group insurer, Hagger said at the Financial Services Council (FSC) conference on Thursday.
Insurers needed to price competitively to attract business but insurers that priced too low would be impacted by unforgiving margins, Hagger said.
Industry funds offered the largest growth potential within the sector and presented both opportunities and challenges, including consolidation between funds, he said.
It was important to be on the right side of industry funds consolidation because if two large funds with different insurers merged, one fund would get all the business while the other missed out, he said.
“There are big stakes at play if you lose one of those funds,” he said.
First State Super chief executive Michael Dwyer said the insurers’ challenge is “providing the best, most appropriate product at a reasonable cost”.
Many trustees would debate the introduction of anything, such as group insurance, which detracts from a member’s final lump sum payout, Dwyer said.
The superannuation industry needed to help generate a need and a want for insurance to ensure members were adequately insured, he said.
The relationship between insurers and super funds is critical, and the two needed to work together to ensure members were able to understand complex documents such as Product Disclosure Statements and significant event notices, he said.
Administration constraints in both super funds and insurers also needed to improve going forward, Dwyer said.
AUTHOR
Mike Taylor
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