A year of change that will produce decades of value
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With another financial year behind us, let’s take time to consider some of the more significant developments in the past year that may have profound and positive impact on Australians in the decades to come.
Self-regulation and legislative change
This year kicked off with the Financial Services Council’s (FSC’s) Life Insurance Code of Practice coming into effect.
The Life Code is a reflection of our commitment to improving life insurance standards for the benefit of all Australians. It’s significant because the Code was developed voluntarily by the industry and is mandatory for all members of the FSC, and aims to:
- Promote high standards of service to members
- Provide a benchmark of consistency within the industry
- Establish a framework for professional behaviour and responsibilities.
Off the back of the Life Code, an Insurance in Superannuation Working Group (ISWG), comprising representatives from across the industry, developed and released (in December 2017) the Insurance in Superannuation Voluntary Code of Practice for superannuation trustees (Insurance in Super Code).
This voluntary code came into effect on 1 July 2018 and sets standards that provide greater understanding, clearer accountability and consistency of delivery across the superannuation industry. It includes:
- A framework that sets expectations about the maximum amount of superannuation contributions that should be used for payment of default life insurance.
- Simpler and clearer processes and communication for members to opt-out of automatic life insurance.
- Simplified disclosure and improved member communications about life insurance.
- Requirements to reduce multiple insurance policies by cancellation of some insurance, after funds contact members, in cases where member accounts are inactive and insurance exists.
- Provision of better and more timely assistance to members during claims.
- Trustees to give strong consideration to the appropriateness of issuing insurance to vulnerable member categories.
- Requirements for trustees to publish plans for the Insurance in Super Code implementation and when various aspects of it will be implemented.
The other significant activity in the legislative environment was the 2018/19 Federal Budget, delivered in May, which proposed some further changes in our sector related to insurance within super. The proposals, which are proposed to take effect from 1 July 2019, include:
- Superannuation fund members with an account balance less than $6000 will no longer receive life insurance on an opt-out basis and will have their insurance cover removed
- Life insurance for those members deemed inactive for a period of 13 consecutive months will be removed
- New members under age 25 will need to opt into cover
As supporters of the Insurance in Super Code, we agree we can do more to reduce duplicate cover within superannuation. We believe the occupational and lifestyle factors of those under age 25 drive a potential need for some death and disability cover (TPD or income protection). In the last four years, CommInsure has paid around $60 million in claims to people aged under 25, with one quarter relating to death claims.
A key thing to keep in mind with any legislative or regulatory change is affordability. We fundamentally believe that insurance in superannuation is an efficient way to distribute important cover at an affordable premium rate. Super Ratings reports the average group insurance premium for a male under age 25 is $203, which is less than $4 a week.
Corporate Insurance: unleashing the value
One of CommInsure’s releases this year was our new Corporate Cover Combined PDS and Policy to the market. We are especially proud of this development and the reception it has received, especially for the flexible options available for key terms and conditions, easier to read and understand policy terms, and the number of avenues it opens up for claimants to leverage off our highly regarded rehabilitation services.
Our new offer reflects the number of factors changing the dynamics of the corporate insurance offer, including fiscal discipline, scrutiny in superannuation, changing employee demographics and the increasing importance of employee benefits as a mechanism to attract and retain talent.
Above all, the heart of a good corporate insurance relationship lies in the partnership – and that’s where we are consistently strong. We know corporate clients need an insurance partner who is easy to work with, who understands all businesses don’t operate the same way, and can offer bespoke solutions.
Helping claimants with support, care, expertise and wellness programs
Our Back to Wellness Program, which received the AFA ‘Risk Product Innovation Award’ in 2016, continues to grow in stature and significance. In 2018, Julie Ann MacCormick, who leads our Rehabilitation team, was recognised with an FSC Industry Leader Award.
Back to Wellness engages and empowers members in their own recovery within a collaborative and supportive claims framework. Its purpose is to reduce the impact of mental health and restore wellness. While income protection is a very valuable safety net, at the end of the day, it protects up to 75 per cent of your income and our collective goal should be to support members to return to work and earn 100 per cent of their income.
Rehabilitation in the claims process has traditionally been in occupational or vocational rehabilitation. However, we knew that in order to get all our members back to their quality of life, we needed to help them with confidence and re-engagement in the community. That’s why the Community Connect aspect of Back to Wellness is recognised as industry-leading and has set a trend that others in the industry are following.
The other innovation in claims this year has been our development of a market-leading digital claims proposition. This end-to-end digital claims service takes the strain out of lodging claims for members of our group insurance partner funds and guides them through their claim journey.
Our new digital claims interface was designed and prototyped with fund members using ‘design-thinking’ techniques and leveraging the latest digital know-how.
We know that members are looking for more than just a payment. Embracing digital capability will bring faster lodgement of claims allowing us to support more members with more effective return to work programs before they reach the point where they have been off work for too long. Faster claims lodgement allows a case manager to quickly connect with a member and provide the earlier benefit of our support, care, expertise and access to wellness programs.
The challenge for the industry continues to lie in the implementation of legislative and regulatory change and preparation for the Insurance in Super Code compliance deadline. We know we need to work with funds to help them understand the changes, the impact and how to implement change efficiently and in their members’ best interest.
In the product space, we will continue to explore how we can continue to meet changing member needs and roll out analytical tools to better understand the needs of members as well as work on new, innovative product offerings for the future. Our ongoing commitment is to innovate and ensure there is continued value in the insurance offering we provide members and we look forward to another productive year.