Australia's largest superannuation fund is reducing insurance premiums that will save members $100 million over the next financial year.
From May 2018, AustralianSuper and life insurance partner TAL will decrease life insurance premiums by 14% for death cover; 6% for total and permanent disability (TPD); and 20% for income protection.
According to AustralianSuper group executive of membership Rose Kerlin, the fund provides insurance to 1.4 million of its 2.2 million members who pay about $500 million in premiums each year.
Kerlin added the fund uses its size and scale to provide the best possible cover by negotiating bulk rates that's more affordable compared to members purchasing the same cover on their own.
"In addition, we don't pay commissions to advisers, and don't receive commissions from insurers. This premium reduction for the industry division will benefit the overwhelming majority of members and no member will have a premium increase," she said.
From November 2018, new members joining under the age of 25 will not receive default insurance, but have the option to purchase it.
Its latest product, Super Only, aims to protect accounts of members employed under the Supported Employment Services Award - short-term, seasonal or intermittent employees working for less than six months eroding from insurance premiums.
In a separate initiative, AustralianSuper announced it has signed up to the Insurance in Superannuation Code of Practice and is implementing the code across its membership base.
"AustralianSuper already exceeds many of the minimum standards set out in the code as part of our ongoing effort to improve services to members," Kerlin said.
By way of example, Kerlin said default insurance costs equate to around 0.8% of salary over the member's lifetime in the fund, compared with the code's maximum of 1%.
"Importantly, this includes the majority of service levels outlined in relation to claims, and where we are not up to the code's standard we aim to be there by end of 2019 - more than 18 months ahead of the code's timetable," she said.
She added the fund has recently developed a rehabilitation model that's assisted about 200 members who were receiving income protection payments to return to the workplace in the past 12 months. Over the past 10 years it has paid more than $2.6 billion to 45,000 claimants.
Australia's largest super fund manages more than $120 billion of members' retirement savings.