The life insurance sector has been under pressure to lift its game for years. Successive governments, parliamentary committees, ASIC and the Productivity Commission have all recommended reforms. ASIC chair James Shipton is blunt: “People are being sold products they don’t want, can’t afford, or [that] don’t perform as they expected,” he says.
But industry lobbyists have been fighting back, using shock tactics to frighten crossbench senators, circulating harrowing case files and warning that any changes will leave them with proverbial ‘blood on their hands’. Superannuation funds are required to offer life insurance to most members, but this obligation is poorly understood by consumers. This system has allowed insurers to profit from a variety of perverse outcomes. Change is long overdue. People without dependents or liabilities are paying for life insurance they probably don’t need. Sneaky exemptions to prevent payouts are buried in the fine print.
For low-income earners, premiums can quickly erode retirement balances. In the wake of the royal commission, the scaremongering from the ‘life insurance mafia’ is brazen. There are bills before
parliament and more royal commission-related reforms on the horizon to require life insurers to provide products that are fit for purpose.
Super Consumers Australia at CHOICE is pressing our politicians to stand up to these ‘mob tactics’.
