POWERED BY MOMENTUM MEDIA
Superannuation funds exposed to anti-selection
Superannuation funds need to carefully monitor increasing automatic acceptance limits (AALs) to keep anti-selection under control, according to RGA Reinsurance managing director Pauline Blight-Johnston.
Speaking at an ASFA luncheon on group life insurance, Blight-Johnston said that people often misunderstood the role that underwriters played.
"The purpose of underwriting is like a metal detector at an airport. Because the metal detector's there, you don't try to take metals things through. [Underwriting is] not there necessarily to find out more about peoples' health than they already know," she said.
The problem with high AALs was that it opened up the possibility of high levels of anti-selection (ie, when a person finds out they are terminally ill and then attempts to get life insurance) - particularly at a time when funds were watering down their other controls against anti-selection, she said.
"There are some funds out there at the moment that are exposed to anti-selection," Blight-Johnston said. "At the moment that doesn't seem to have been picked up by the population, so I think we're getting away with it - but at some point in time we need to be alert to it."
AustralianSuper general manager Paul Schroder disagreed that there was a problem with high AALs.
"I think all the good funds have got their own strong plan and they've worked with their insurer - and their insurer's working with their reinsurer - to come up with something sensible, and it gets reviewed," he said.
Blight-Johnston agreed with Schroder that higher AALs were effective in tackling underinsurance, but she stressed that they needed to be closely monitored.
Recommended for you
Volatile markets driven by shifting US tariff policy failed to rattle Australia’s superannuation system in April, with balanced options inching upward.
ASFA has urged greater transparency and fairness in the way superannuation levies are set and spent.
Labor’s re-election has reignited calls to strengthen Australia’s $4.2 trillion super system, with industry bodies urging swift reform amid economic and demographic shifts.
A major super fund has defended its use of private markets in a submission to ASIC, asserting that appropriate governance and information-sharing practices are present in both public and private markets.
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
36.96 3 y p.a(%)
3
GAM LSA Private Shares AU I
34.22 3 y p.a(%)
4
VanEck Video Gaming and eSports ETF (AU)
28.89 3 y p.a(%)
5
Plato Global Alpha A
28.83 3 y p.a(%)
