Group insurers not doing enough to prevent the growing problem of employees owning multiple superannuation funds and life insurance premiums is equivalent to theft, according to today's life insurance parliamentary inquiry.
Senate Parliamentary Joint Committee on Corporations and Financial Services chair Steve Irons said the responsibility shouldn't fall solely on the individual, rather super funds and insurers must also take action.
Irons said for an individual who left their employer and stopped making contributions to the fund, but was still being charged premiums for a period of four years, is not only "crazy" but equivalent to "robbery."
Super funds and insurers are not making enough effort to "chase [people] down" that have multiple accounts and within that unnecessary life insurance policies, he said.
Irons suggested establishing an industry database of multiple accounts that's transparent enough to curb this problem.
CommInsure managing director Helen Troup, one of four Commonwealth Bank representatives to front the hearing today, said it is up to the individual trustees of the super funds to determine how this should be handled.
Troup added the industry is working on an agreed standard to turn off insurance policies after 13 months if an employee leaves a job and ceases making contributions.
CBA group executive of wealth management Annabel Spring said taking away insurance altogether will not solve the problem of employees with multiple accounts and therefore multiple layers of insurance.
Spring suggested 18 to 21-year-olds specifically should be able to opt-in to a life insurance policy - as for those who don't, the funds could best use it to grow super balances.
Spring called on the Committee to make group insurance available on the myGov website in an effort to raise awareness and engagement around life insurance policies, what employees are covered for and how much in premiums they are paying.
In past hearings, the Committee has expressed its concerns over the limits of the Financial Services Council Life Insurance Code of Practice which doesn't cover group insurance. CommInsure, an FSC member, has adopted the code.
AMP appeared at the last hearing said it intends to sign up to the FSC Code of Practice as a super trustee, which took effect on July 1.
"We acknowledge that work is needed to ensure that the Code applies sensibly and practically to the trustee. In this context, AMP will provide a draft to the FSC to implement our intention in the next few weeks. We look forward to working with other trustees to achieve this intended outcome," AMP said in an additional submission.