10% of insurance inside super underwritten | Australian Markets

The superannuation foyer has confirmed the degree to which insurance inside superannuation can be largely proof against the implications to genetic testing, as a result of so little of it’s underwritten.

The Association of Superannuation Funds of Australia (ASFA) has pointed to Australian Prudential Regulation Authority (APRA) knowledge indicating that solely round 10% of insurance inside superannuation is definitely underwritten.

“Only a minority of cover through superannuation is underwritten,” it mentioned. “APRA data indicates that only around 10 per cent had higher cover than default levels which involved underwriting. However, this amounts to at least 900,000 individuals.”

“That said, in many cases the underwritten level of cover will be below the amounts set out in the Financial Services Council moratorium document,” ASFA mentioned in a submission to Treasury supporting a ban on the use of opposed genetic testing leads to life insurance.

“Only a small proportion of those with underwritten policies will have taken a relevant genetic test. A recent Australian study of individuals aged over 45 indicated that around 5 per cent had undertaken disease related genetic testing.”

“Sector research released in 2021 indicated that around 10 per cent of individuals who disclosed a genetic test result had insurance cover offered on less favourable terms or had cover declined.”

“Running by way of the assorted percentages, it’s probably that at the moment no more than a few thousand of the 9 million or so people with group life cowl by way of superannuation at the moment would have life cowl subject to extra phrases or would have cowl declined as a result of of a genetic check outcome.

“This suggests that the aggregate cost to insurers providing group cover through superannuation of banning use of adverse genetic testing will be quite low, especially given that only a proportion of individuals with an adverse genetic test result will go on to have an insurance claim.,” ASFA mentioned.

“However, use of genetic testing may well increase in the future, especially if there is a ban on the use of adverse genetic test results in the underwriting of insurance. The incidence of both individually underwritten insurance and higher levels of cover are greater outside of superannuation.”