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BT un-aligns group insurance, awards mandate

Westpac's BT super has awarded a group insurance mandate, switching members away from Westpac Life Insurance Services.

AIA Australia has been appointed as the new group insurer, with the change coming into effect from 1 July 2020.

The change will impact BT Super and BT Super for Life members, including the Westpac Group super plan.

There will be no change at all to the cost of insurance for members.

According to December's life insurance statistics from APRA, Westpac Life Insurance had a policy revenue of $984 million in 2019 and a net profit after tax of $157 million.

AIA meanwhile failed to turn a profit in 2019, but is larger with $1.3 billion in policy revenue.

"AIA is an award-winning global insurer with over 47 years' experience in Australia, that shares our philosophy of supporting the health and wellbeing of our members," BT said in a note to superannuation members.

The new financial year also saw BT update super members on fees and costs.

The Regulatory Change Expense Recovery fee reduced for BT Lifestage members from 0.05% to 0.01% and for all other investment options from 0.10% to 0.05%.

The Regulatory Change Expense Recovery fee is designed to help BT cover the costs of government reforms impacting super funds.

On 4 May 2020, Westpac announced a review of its business units - determining that several business units lacked sufficient scale. One of those units was its life insurance business.

BT super switching group life insurer away from Westpac was flagged as a write-off in Westpac's 2020 first half financial results. The impact on cash earning was estimated at $70 million.

Westpac and Westpac Life Insurance Services are currently facing a class action from policy holders arguing that the recommendations made by Westpac aligned financial advisers breached fiduciary and statutory duties. A trial date has been scheduled for May 2021.

Read more: Westpac Life Insurance ServicesRegulatory Change Expense RecoveryBT Super for LifeWestpac GroupAIA AustraliaAPRABT Lifestage
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