‘Scandal-ridden banks’ untrustworthy on insurance
The “scandal-ridden” banks are the second biggest provider of group insurance but cannot be trusted to act in the best interests of Australians, according to industry superannuation fund, Vision Super.
The industry fund has used a submission to the Productivity Commission (PC) inquiry into superannuation fund Competition and Efficiency to argue strongly for retention of the current insurance within superannuation regime on the basis that it helps close the under-insurance gap.
“Australians are underinsured,” the submission said. “Only 27 per cent of Australian workers have income protection insurance, and just 25 per cent have death cover.”
“This gap is at least partly caused by a knowledge gap, with only 19 per cent of Australians having good or very good knowledge of disability insurance, and 15 per cent having good or very good knowledge of premature death insurance – nearly half (47 per cent) report little or no knowledge of premature death cover,” it said.
“Against this backdrop, insurance within the superannuation system is the closest thing we have to a universal base level of cover for Australian workers, with more than 70 per cent of all life cover provided via superannuation.”
“With little to no underwriting, a high ratio of claims paid, and lower prices than retail cover, for most Australians cover through their super is the only life insurance they have,” the submission said. “The scandal-ridden banks are the next biggest provider of insurance, and manifestly cannot be trusted to act in the best interests of Australians.”
The submission then directly pointed to the problems besetting the Commonwealth Bank.
Detailing those problems, the submission said it was “difficult to see why the Government would wish to hand over a larger segment of the insurance market to the retail market”.
“Aside from the tarnished image of the retail providers, retail insurance typically includes underwriting requirements, meaning Australians with existing health conditions cannot obtain cover, and those working in some sectors would find it difficult, if not impossible, to obtain insurance,” the submission claimed.
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