About one-fifth of superannuation funds changed insurance rates or cover in the final quarter of 2016, latest Rainmaker research shows.
The just-released Superannuation Benchmarking Report details how these super funds changed insurance rates or cover, looking at movement in rates across age cohorts, the lowering of default cover for younger ages and increasing rates for higher risk groups. It highlights the increasing competitiveness among group insurance and the importance to a super fund's overall offering.
Rainmaker's analysis includes a summary of the rate and coverage movements by using the proxy of average cover per dollar of weekly premiums for a 40-year-old white collar worker. On average across all insurance types - death, TPD and income protection - the average cover value increased for members.
"A greater proportion of funds (38%) increased cover value than decreased (16%), while about half of the funds left overall rates and cover steady. There however continues to be significant variation in the changes in average cover value across products," Rainmaker said.
Regarding income protection, the base cover value proxy (40-year-old male, two years benefit period with 60 days waiting period) for a low-risk white collar worker increased by 7% compared to only a 2% increase for higher-risk blue collar workers.
While both death and TPD, and income protection changes saw an average increase in cover value, stand-alone death only cover changes saw a slight decrease in cover value per dollar of premium for white collar members, Rainmaker said.
The quarterly movements in insurance cover per premium dollar, coupled with the finessing of terms and conditions definitions, continues the theme of a product continuing to adapt to market and increasing focus on pricing for risk within market segments.