A national insurance plan could serve Australians better than group coverage within superannuation funds, a large insurer said yesterday.
Aon Hewitt head of health and benefits Matthew Brown said there was "merit in thinking about national insurance that was community-rated and priced".
Premiums would continue to come out of the compulsory superannuation guarantee, and each super fund would forward contributions to the nationally administered system. Brown said that could take in the National Disability Insurance Scheme.
"It's time to stop and think where we're headed," he said at the AIA Australia Group Insurance Summit held in Sydney.
"The data issues [of the past 20 years] are not insurmountable, and it's time to step back and perhaps take insurance out of superannuation."
He referred to New Zealand's KiwiSaver system and to that country's panel of insurers which spread the risk of insurance.
National insurance could alleviate the "massive underinsurance problem", he said.
Numerous speakers on the summit panel voiced concerns on liabilities and pricing; the lack of data quality and consistency; and the relentless pressure to lower premiums to retain or win insurance business.
RGA Reinsurance vice president of business development Andre Dreyer said mergers were "on the go with every fund and insurance is the least of the concerns".
"Insurance companies can be flexible ... and have a good track record in mergers, but how do we allow for the different cohorts who come in?" Dreyer said.
"The warning signals are ringing out."
"In group risk, we don't want to go down the same path as in individual insurance" on costs, he said.
He also warned about post-merger liabilities.
"Where claimants are covered under one insurer, do they continue to be paid by that previous insurer after a merger? This is the single biggest risk and we have to ensure no members are left behind," he said.
"As margins come down, and pricing comes down, how sustainable is this?"
The lack of consistent data was a common criticism of the speakers. "I'm surprised there is no industry comparable data," Dreyer said.
He attributed it to 20 years of 15 per cent growth each year.
"It's been a bull run in this industry. Data for insurance was the last thing on people's minds," he said.
AIA Australia board member Paul Costello, who is also part-time associate commissioner for the Productivity Commission, said that after 20 years of compulsory super contributions, the group insurance market was "still not a reliably informed market".
Costello compared corporate funds with industry funds, saying data in the former sector was better than the latter.
"Corporates are much more focused [on data] because they are paying the premiums," he said.
CareSuper chief executive Julie Lander agreed with Costello, saying it was usually "a much better story with corporates" on clean and consistent data, in contrast to industry funds, which dealt with "thousands of employers" who thought "we are a thorn in their side".
