Thousands lost insurance inside super, few complained
Few superannuation fund members appear to have realised or missed the loss of their insurance cover inside superannuation as a result of the Government’s Protecting Your Super and Putting Members Interest First legislation.
Despite predictions that the loss of insurance cover inside superannuation would result in an upturn in complaints from the affected superannuation fund members, little appears to have actually happened.
An examination of complaints data compiled by the Australian Financial Complaints Authority (AFCA) and data provided to a Parliamentary committee by the Australian Securities and Investments Commission (ASIC) reveals the predicted uptick in complaints simply did not occur.
The legislative changes impacting insurance inside superannuation for low balance (less than $6,000) came into effect from 1 April, 2020, and it was predicted by some superannuation fund and insurance company executives that it would result in an upturn in complaints when members became aware of the loss.
However, the AFCA data covering superannuation complaints across 2019/20 and 2020/21 revealed virtually no change at all.
Insurance related complaints with respect to superannuation stood at 38.74% in 2019/20 and rose by 0.04% to 38.78% in 20/21.
For its part, ASIC told Senate Estimates that it had not specifically looked at complaints superannuation fund member had made about their income protection insurance, or at instances of insurance being cancelled as a result of the commencement of the Protecting Your Super and Putting Members’ Interests First changes.
However, the regulator did make the point that complaints relating to insurance in superannuation equally traversed all types of funds.
“ASIC has received complaints in relation to nearly all superannuation funds and insurers across the full spectrum of providers, including industry funds, retail funds and life insurers,” it said.
“No particular entity has received significantly more complaints relative to their market share.”