Invest
Over 650,000 members lose insurance from early super
More than 650,000 super fund members are projected to lose their life insurance as a result of the government’s early release scheme, new research has found.
Over 650,000 members lose insurance from early super
More than 650,000 super fund members are projected to lose their life insurance as a result of the government’s early release scheme, new research has found.
Research house DEXX&R’s Market Projections Report projected total group insurance premiums for the year to fall by $226 million by December 2020, as Australians continue to withdraw funds from their super accounts.
The group said around 660,000 fund members were predicted to lose their insurance cover as a result of their account balance falling below the threshold for premiums to continue to be deducted.
“It will be several years before many of these members again have a balance at a level where they are eligible to receive default insurance cover,” DEXX&R said.
As a result, growth in the group insurance market was expected to be flat for the foreseeable future, with lump sum in-force premiums growing by just 1.8 per cent per year until 2029. New annual premiums were projected to fall by 11 per cent per year to $284 million by December 2029, down from $860 million in December 2019.
“The lower projected lower growth rates for both new and in-force group premiums reflect the impact of the COVID-19 super early release scheme, higher unemployment leading to a reduction in the number of active accounts eligible for automatic cover on an opt-out basis, and slower growth in account balances as the result of underemployment with little or no growth in wages and salaries over the next five years,” DEXX&R stated.
Moreover, the assumptions in the group’s modelling included the legislated increases in the super guarantee, which the government flagged this week may not go ahead.
The report stated that if the SG was not increased, growth in the group insurance market would be “further reduced”.
Meanwhile, the group said the impact of the crisis on the retail risk market would be “minimal”, with “a small impact” arising from clients taking out benefit suspensions while their working hours were impacted by lockdown periods, and further lapses expected to flow through as unemployment rose in the years following the crisis.
“Existing pre-COVID issues faced by insurers are expected to have a greater impact on subdued growth in new and in-force [retail] premiums over the next five years. These issues include a fall in number of advisers actively recommending risk products,” the report stated.
DEXX&R projected in-force term life and TPD premiums in the retail channel to grow by 1.5 per cent per year to December 2029, while trauma in-force premiums were expected to grow by 1.5 per cent per year and disability income in-force premiums would grow by 2.6 per cent per year.
RELATED ARTICLES
Insurance
Australians prioritise life insurance over luxuries amid cost-of-living pressures
Australians are choosing to maintain life insurance and income protection policies over discretionary spending including gym memberships, holidays and mobile phone upgrades, new research has found. Read more
Insurance
Aussie property owners teeter on financial ruin as underinsurance crisis escalates
According to industry-first data compiled by leading insurance expert MCG Quantity Surveyors, Australian property owners are facing a dire underinsurance crisis, with many just one insurance event ...Read more
Insurance
Insurers ramp up concerns over greenwashing amid stricter ESG standards
A recent global study has shed light on the growing apprehensions within the insurance industry regarding greenwashing, as environmental, social, and governance (ESG) criteria become more rigorous. Read more
Insurance
Ortec Finance study highlights insurers' readiness to tackle increased investment risks amidst growing concerns
A new study conducted by Ortec Finance, a premier provider of risk and return management solutions for the financial sector, indicates a notable shift in the risk-taking attitude among insurers ...Read more
Insurance
Climate disasters leave 1 in 25 properties uninsurable by 2030
Climate change-induced disasters and mounting risks of dangerous weather will make one in 25 Australian properties “effectively uninsurable” by 2030, according to a damning new report from Australia’s ...Read more
Insurance
Insurers running for cover from accusation of “failing consumers”
As insurance providers have recently been inundated with a large volume of claims for damages from yet another set of so-called “once-in-a-hundred-years” floods, the embattled sector is now coming ...Read more
Insurance
Class action over add-on insurance commences in court
Allianz has been accused of engaging in misleading or deceptive conduct. Read more
Insurance
Saving money on insurance means asking the right questions
There are plenty of must-do’s and missteps that those looking to buy home and contents insurance need to stay on top of. Read more
Insurance
Australians prioritise life insurance over luxuries amid cost-of-living pressures
Australians are choosing to maintain life insurance and income protection policies over discretionary spending including gym memberships, holidays and mobile phone upgrades, new research has found. Read more
Insurance
Aussie property owners teeter on financial ruin as underinsurance crisis escalates
According to industry-first data compiled by leading insurance expert MCG Quantity Surveyors, Australian property owners are facing a dire underinsurance crisis, with many just one insurance event ...Read more
Insurance
Insurers ramp up concerns over greenwashing amid stricter ESG standards
A recent global study has shed light on the growing apprehensions within the insurance industry regarding greenwashing, as environmental, social, and governance (ESG) criteria become more rigorous. Read more
Insurance
Ortec Finance study highlights insurers' readiness to tackle increased investment risks amidst growing concerns
A new study conducted by Ortec Finance, a premier provider of risk and return management solutions for the financial sector, indicates a notable shift in the risk-taking attitude among insurers ...Read more
Insurance
Climate disasters leave 1 in 25 properties uninsurable by 2030
Climate change-induced disasters and mounting risks of dangerous weather will make one in 25 Australian properties “effectively uninsurable” by 2030, according to a damning new report from Australia’s ...Read more
Insurance
Insurers running for cover from accusation of “failing consumers”
As insurance providers have recently been inundated with a large volume of claims for damages from yet another set of so-called “once-in-a-hundred-years” floods, the embattled sector is now coming ...Read more
Insurance
Class action over add-on insurance commences in court
Allianz has been accused of engaging in misleading or deceptive conduct. Read more
Insurance
Saving money on insurance means asking the right questions
There are plenty of must-do’s and missteps that those looking to buy home and contents insurance need to stay on top of. Read more
