HESTA renews insurance partnership with AIA, drops fees
Australian superannuation fund, HESTA, has lowered the fees for its members’ insurance cover after renewing its partnership with AIA Australia.
This is the latest in a string of re-appointments for AIA, after first linking up with HESTA in 2018 and its latest partnership renewal coming into effect in 2023.
According to a statement from HESTA, more than $186 million was paid out in insurance benefits to HESTA members in 2024.
“We’re pleased to continue our strong relationship with AIA Australia, which will support us in providing high-quality, long-term insurance protection at better value for our members,” HESTA chief executive, Debby Blakey, said.
“As a fund focused on healthcare and community services, ensuring simple access to appropriate and affordable insurance coverage is critical and can provide peace of mind to members and their families.
“It’s a great outcome for our more than one million members that we’ll be able to help cut insurance costs for them at a time when many Australians are experiencing higher prices.”
HESTA also said the decision to re-appoint AIA Australia as its insurance partner followed a tender process that commenced in December 2024. The fund said ahead of the new agreement coming into effect next year, it will work closely with AIA to finalise “pricing, product design, and [improved] terms and conditions” for members.
“We look forward to working closely with AIA to further enhance our insurance offering and deliver even better outcomes for our members in the years ahead,” Blakey said.
“We also want to recognise the high-quality proposals received from a range of insurers as part of our tender process, and would like to thank them for their strong interest and their time and effort in submitting very competitive proposals.”
As usual the devil is in the detail. The Hesta insurance brochure confirms what risk Specialist have always known – that default death and TPD cover starts to reduce after a certain age. In this case it’s age 40, which I suppose is a little better than Age 37, which is the typical age in the other industry funds. Just-in-time for covering your new increased mortgage after your health has changed
Over in TPD there’s been a significant change. If you are Permanently disabled from a mental health condition you will be assessed by a PIRS test where you have to achieve a 19% rating before a benefit will be paid. 19% is a mid-range reading. And still no reference in the document to lump-sum tax on TPD. That’s just asking for the TPD claimant to get a nasty surprise when the benefit is reduced for the tax.
The segregation of TPD claims into mental health or other causes may be an indication of where the retail life industry is going with TPD premiums, given the hysteria currently being put out by the industry that they are paying too many TPD claims for mental healthFor the product to remain sustainable in the eyes of the masters of the nuclear option,APRA.In some ways it could be argued that using a PIRS evaluation provides some certainty for TPD claims with the causes of mental illness but it could be subjected to some pretty nasty Questioning on treating psychiatrists from claims offices. But to be clear, the test for a successful TPD claim is that the illness must be permanent, and the depending of the treating psychiatrist and the psychiatrist employed by the insurer.
If any insurer is cracking down on mental health claims, that is very welcome news. For too long insurers have paid dubious mental health claims without question, due to fear of the mental health lobby. This has drastically increased premiums for all TPD and IP policy holders to levels many now find unaffordable.
Bravo AIA and HESTA for finally pushing back. Hopefully more will do the same. Ideally mental health needs to be stripped out of all TPD and IP policies, and made an optional extra priced in line with mental health claims incidence. Let consumers decide if they actually want mental health cover, and are willing to pay its exorbitant cost.