As I explained in the introduction to this chapter, an important feature of the life insurance market is that life cover, total and permanent disability cover, income protection cover and trauma cover are available not only through individual policies but also through group arrangements.
Most life insurance policies in Australia are held within superannuation funds.[1] In its report, Superannuation: Assessing Efficiency and Competitiveness, the Productivity Commission said that about 12 million Australians have one or more forms of life insurance through their superannuation.[2] That may be compared with the individual life insurance market. ASIC Report 498, Life Insurance Claims, An Industry Review, said that in 2015, there were 4 million retail policies and 3.9 million direct or non‑advised policies.[3] In 2016/2017, Australians paid a total of $9 billion in group life premiums.[4]
Notwithstanding the prevalence of group life policies, consumers’ awareness of the content, or even existence, of their policy is relatively low. The Productivity Commission’s Draft Report stated that about a quarter of superannuation fund members do not know whether they have a policy.[5]
[1]Peter Kell, ‘Insurance in Super: The Regulators – What Do They Think?’ (Speech delivered at the Association of Superannuation Funds of Australia Spotlight on Insurance, Sydney, Australia, 27 February 2018).
[2]Productivity Commission, Report 91, Superannuation: Assessing Efficiency and Competitiveness, 21 December 2018, 365.
[3]Background Paper No 28, 1–2 [1.3] citing ASIC, Report 498, 12 October 2016, 35.
[4]Productivity Commission, Report 91, Superannuation: Assessing Efficiency and Competitiveness, 21 December 2018, 365.
[5]Productivity Commission, Report 91, Superannuation: Assessing Efficiency and Competitiveness, 21 December 2018, 365.