Life, disability and income protection insurance premiums are rocketing up to 85 per cent amid a surge in claims being blamed on everything from stressful work to zealous lawyers.
An estimated 75 per cent of Australian workers insure against death, total permanent disablement and income loss through their superannuation – with many oblivious to their level of cover.
But awareness is increasing, driven by the funds themselves and legal firms, resulting in more claims pushing up the insurance premium component of superannuation fees.
One fund, CBus, increased its death and TPD premiums 84 per cent to $186 a year from July.
The cost of the same products at rival fund Hostplus rose 85 per cent to $144 a year in December.
Australian Super increased death and TPD premiums 35 per cent and salary continuance insurance 75 per cent in July after lifting them 38 per cent and 25 per cent the previous financial year.
The Government Employees Superannuation Board, the default fund for WA’s 140,000 public servants, cited the rises to justify lifting its death and TPD premiums 39 per cent to $129 a year from November.
GESB chief executive Howard Rosario said the rise was necessary because of an increase in claims, especially TPD, which was believed to have a strong correlation to increasing work stress.
Announcing its first premium increases in 15 years, CBus revealed its payouts rose from $40 million in 2010-11 to an estimated $90 million in 2013-14 due largely to “greater lawyer participation and activity”.
Association of Superannuation Funds of Australia chief executive Pauline Vamos said both the number and duration of claims were increasing, with a growing recognition of mental illness driving TPD and SCI claims.
“We have an ageing population, we have a population that does understand that it can claim, we have some societal issues that are now being recognised, for example obesity and mental illness,” she said.
“There are a lot of issues related to mental illness.”
Graeme Russell, chief executive of Media Super, which lifted premiums an average of 45 per cent for its 110,000 members in December 2012, said the equation driving the increases was simple: insurance companies needed more income than claims paid.
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