Divisive life insurer worker rehabilitation debate reopens

The divisive issue of superannuation life insurers playing a role in getting injured workers back to work sooner has been reignited by the Association of Superannuation Funds of Australia (ASFA) and Deloitte.

The issue, which created serious divisions when it was canvassed under the auspices of the Financial Services Council (FSC), has been canvassed within a new report on insurance inside superannuation produced by ASFA and Deloitte.

The concept has previously run into trouble with some trade union sponsors of industry superannuation funds who have argued that life insurers would be tempted to place undue pressure on superannuation fund members to get them to return to work more quickly than is advisable.

However, the ASFA and Deloitte report suggests that genuine benefits can be achieved from such arrangements if the current barriers are removed.

“Our analysis finds 11% of IP (income protection) insurance claimants who access rehabilitation treatment and services are likely to return to work where they otherwise would not have. Broader access to treatment is also estimated to result in those who would have returned to work anyway doing so on average 5 weeks earlier. Smaller benefits also exist for TPD (total and permanent disablement),” the report said/

“Broader access to treatment could assist an estimated 29,300 members to return to work over the first forty years. Once transitions back to the workforce and retirement is accounted for this would yield an additional 4,400 full-time equivalent workers to the Australian economy by 2062, boosting GDP by around $1.1 billion in that year. At the same time a further $126 million in social and other costs of unemployment would be saved.”

The report said improving access to early interventions – including before members make a claim – would deliver further benefits.

“In this scenario 21% of IP claimants who access these services are likely to return to work where they otherwise would not have – 11% as a result of broader access to treatment and 10% as a result of access to early intervention. Broader access to treatment and early intervention is also estimated to result in those who would have returned to work anyway doing so on average 10 weeks earlier,” it said.

“These expanded benefits would assist around 82,900 members to return to work over the first forty years. This is estimated to yield 7,800 extra full-time equivalent workers by 2062, delivering $1.9 billion in additional GDP in 40 years’ time. Social and other costs would be reduced by $224 million”