The Minister for Revenue and Financial Services, Kelly O’Dwyer has acknowledged that the Government’s next steps on both “opt-out” and “opt-in” for insurance within superannuation will be significantly influence by the findings of the Productivity Commission (PC).
Responding to questioning during the Financial Services Council Leaders’ Summit in Sydney, O’Dwyer declined to give a firm view on the question of “opt-in” but said that the Government had specifically-tasked the PC with reviewing the issue.
“I will be interested to see the outcome,” O’Dwyer said.
A panel of insurance company senior executives later expressed mixed views about the minister’s announcement earlier this week that the Government had asked the Australian Prudential Regulation Authority (APRA) to make it easier for people to opt-out of insurance inside superannuation.
MLC Life chief customer officer, group insurance, Suzanne Smith urged a cautious approach pointing out that people did not necessarily understand the implications of opting out.
“There is no doubt that as an industry we need to do better, but you won’t solve the problem by making it too easy to opt-out,” she said.
By comparison, Metlife chief executive, Deanne Stewart said she applauded making opting out easier because it had too often been too difficult.
However, she said she believed Australia’s group insurance regime represented a world-class system which generated a basic level of protection which would not otherwise be available to the great majority of Australians.
Stewart said she believed four critical things had been identified which needed to be addressed – erosion of superannuation, claims-handling (with total and permanent disablement claims taking up to six months), product design, and member awareness and easy access.
She said she viewed easier opt-out in the context of member awareness and easy access.
The Financial Services Industry should have adopted opt out not opt in. An awareness campaign on opt out would allow clients to opt out if they no longer want advice. Instead we adopted a system that every client now has to opt in. Yet again we make it harder for the people that are engaged and want to get ahead. An exemption on group is a joke. The whole Industry should have adopted opt out! I can tell you having your staff to process FDS and opt in is a huge cost to business and to the end costumer. Opt out would allow the consumer to leave at any time and be clearly informed and save a massive amount of administration burden and achieve the same outcome and I would argue a better informed as the client would feel more in control at all time.