The Government’s re-think on a commissions ban on life insurance within superannuation must extend to group risk, or millions of Australian workers will lose the affordable access they currently have to life insurance advice within their corporate superannuation plans, according to the Corporate Super Specialist Alliance (CSSA).
The Minister for Financial Services and Superannuation, Bill Shorten yesterday announced the Government was considering changing its stance on banning commissions on life insurance within superannuation – but only for individually advised insurance. He said he did not see the case for commission on insurance through default or group policies.
President of the CSSA, Douglas Latto, said the Government should not be making a distinction between individual and group risk, but between advised and unadvised insurance.
“There is an assumption that all group insurance is unadvised,” Mr Latto said. “In fact, a lot of group insurance is advised. The distinction that should be made is not between group insurance and personal insurance but between advised insurance and non-advised insurance; that is the more important distinction.”
Mr Latto said the advice and services provided by advisers to members of corporate super plans include:
- Negotiating with the insurer for reduced premiums and better features (such as higher levels of automatic cover, thus requiring less evidence of health from members)
- Ensuring members receive their full formula entitlement and are not restricted to automatic acceptance levels
- Assisting members with their claims
“These are the active services that we are paid, via commissions, to provide to employees,” Mr Latto said. “We’re constantly reviewing things like premium costs, automatic acceptance levels and policy features; keeping a briefing eye on it on an on-going basis. Everyone in the fund benefits continually from that.”
Mr Latto said he was concerned that, if commissions are banned, advisers could no longer service corporate super fund members. “If that happens, who advocates for these ordinary working mums and dads and acts on their behalf at claims time? They can’t do it themselves; it is not the role of their employers and it is not in the best interests of insurers.”
The CSSA is proposing a new commission model for group insurance whereby the level of ongoing commission defaults to zero. Upfront commissions on group insurances have never been paid. Ongoing commission can then be paid at an agreed level with each employer.
“This ensures that employees continue to enjoy ongoing access to pro-active insurance advice and that advisers can afford to service them,” Mr Latto said.