By Laura Millan 4 April 2014 Financial Standard
The claims experience at industry superannuation funds has deteriorated in recent months and is now worse than in retail funds, PriceWaterhouseCoopers partner Barry Rafe said.
Speaking at the Financial Services Council 2014 Life Insurance Conference, Rafe said that “in industry funds, the claims experience has deteriorated lately.”
He said that “master trusts have self-selected themselves a healthier client base” and added that “the employers of master trusts seem to be closer to their employees, and therefore more engaged.”
Another reason for the difference between claims experience in retail and industry funds could be the fact that industry funds have a three year insurance contract that needs to be renewed.
This phenomenon “has quite interesting implications for the ranking of MySuper products and in a few years insurance could be the weighting tool.”
“If everything else is equal, the difference between industry and master trusts will be in the insurance offering,” he said.
RGA Australia chief pricing actuary Martyn Gilling acknowledged that the claims experience is different in industry and retail funds, but added that “different funds have different experiences.”
“In the corporate environment it is typically the employer who pays the premium, so maybe that’s why until now it hasn’t been the same,” he said.
He explained that some funds have seen claims surge by 200%, while other have seen increases of 100% or 80%.
However, Gilling noted that there is a lack of information of the quality of the claim experience and added that “in some cases we are guessing what the actual experience is like.”
Original article here