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MySuper insurance

Universal ban urged on MySuper occupational exclusions

By Mike Taylor20 October 2021

The Government runs the risk of creating anti-competitive consequences unless it seeks to remove occupational exclusions from default insurance within all MySuper products.

In fact, the Government has been warned that unless such a ban on occupational exclusions were introduced across all superannuation funds, it would create significant competitive distortions.

The Association of Superannuation Funds of Australia (ASFA) has told the Treasury it does not support a ban on occupational exclusions for those working in high risk industries, but if that if such a ban is to be imposed then it should be across the entire industry.

“If a ban on occupational exclusions were to be introduced it is important that it apply to all trustees as partial coverage could have anti-competitive consequences and the problem the ban seeks to address would remain for those members of funds who might choose to maintain occupational exclusions,” ASFA told the Treasury.

“For this reason, we recommend that the Government might consider ways to enforce the ban across the entire industry. This could be done through a number of methods such as amending the relevant superannuation legislation or through the regulators, potentially APRA could amend the insurance prudential standard and guidance or ASIC could use its powers relating to ‘superannuation as a trustee service’.”

“ASFA does not support a ban on occupational exclusions for all insurance in superannuation products including ‘choice’ or voluntary insurance as it is appropriate for underwritten insurance to take account of risk measures as determined by the trustee and the product provider,” the submission said.

“However, the Protecting Your Super (PYS) and Putting Members’ Interests First (PMIF) measures have created a class of default members who if they wish to have insurance cover must elect to take up insurance cover, either because they have a low balance account or because they’re under 25 (and so do not receive cover automatically).”

“We consider that the Government should consider ways to extend the protections offered by the ban on occupational exclusions to these members in circumstances where they elect to take up default insurance cover, otherwise they could be left with inadequate cover due to the application of an occupational exclusion.”

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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