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Superannuation industry split on IP in MySuper
Approximately half of superannuation funds plan to include default income protection (IP) with their MySuper offering, according to a survey of superannuation and industry executives at the AIA Australia Group Insurance Summit.
Fifty-five per cent of respondents indicated they would include work cover alongside death and TPD insurance in their default offering.
Some panellists, including AIA Australia general manager Damien Mu and Chant West's head of research Ian Fryer, said group insurance could act as the differentiator between default options.
"With funds relatively constrained by what they can do to differentiate themselves in a MySuper environment, group insurance is one area where funds will have greater licence to stand out from the crowd," Mu said.
The difficulty of tying IP to the differing salary levels of members in a default fund was cited as a major barrier to including IP.
Most respondents agreed, however, that member engagement was an important focus to ensure members' financial security, of which group insurance was an integral part. Over 80 per cent said they would try to engage members on the issue.
Over half planned to do this immediately, while only 3 per cent said they would begin improving awareness in over two years time.
The majority (84 per cent) of respondents said they would attempt to engage members via direct mail, followed by online marketing (65 per cent), call centres (55 per cent) and aligned financial advisers (39 per cent).
Mu said it was surprising more superannuation funds were not utilising social media, with only 7 per cent of respondents saying they used the channel.
"Consumers are becoming more sophisticated as technology becomes an ever-increasing driver in their choices. If members are getting their information and executing their choices via social media and smart phones, funds and their insurers will also have to adapt to this," he said.
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