In the 2018/2019 Federal Budget, the Government proposed a significant change to how default group insurance should be provided to certain cohorts of members across the superannuation industry. Utilising analysis performed by KPMG for the Insurance in Superannuation Working Group (ISWG) in September 2017, we have outlined the potential impact of these changes on funds and insurers.
The proposed changes involve moving insurance within superannuation from a default framework to one that is offered on an opt-in basis for:
KPMG have assessed the potential impacts on super funds and insurers of the Federal Budget changes, utilising analysis performed by KPMG for the Insurance in Superannuation Working Group (ISWG) in September 2017.
Our analysis highlighted the following overall impacts:
The proposed changes will have a material impact (both intended and unintended) for both superannuation funds and insurers. The impact will vary significantly by superannuation fund with a multitude of factors determining the overall change. KPMG expects all funds across the superannuation industry will need to invest a significant amount of effort in strategy, design, pricing and administration to implement the proposed changes – now is the time to think and plan ahead.