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 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.”
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
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