The $31 billion government fund has informed members that their life insurance premiums will be increasing.
ESSSuper, the government fund for the emergency services based in Melbourne, informed members in its accumulation plan that the cost of death and total and permanent disability (TPD) cover will increase.
Death per unit cost increased from $0.525 to $0.5450 (up 4%). Death and TPD per unit cost increased from $1.05 to $1.1217 (up 7%).
The maximum eligibility age for death and TPD cover will also increase from age 65 to 70. The definition of TPD will be broadened.
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After a 2020 open market tender, ESSSuper elected to reappoint Colonial Mutual Life Assurance Society, formerly known as CommInsure, as its group insurer until 30 June 2023. AIA's acquisition of CommInsure was approved by the Federal Court on 1 April 2021.
A spokesperson for AIA said: "Premiums for death and TPD cover have increased by 6.8%. This is less than the average market increase of 13.7%. Premiums for income protection have not increased."
"The increase reflects two significant cover improvements: greater ability for members who are unemployed to claim for TPD, and an extension in the maximum age covered from 65 to 70.
"The premium change is not due to a change in insurer. ESS and CMLA have had a strong relationship for over 20 years, which was renegotiated last year following a market tender. While AIA has since completed the purchase of CMLA, this has no bearing on pricing."
The two insurers sent letters to retail CommInsure policyholders to inform them that they would be transferred to an AIA plan in January.
AIA said the scheme would not affect any policy terms and conditions, or how policyholders and customers do business with their insurer.
In September 2020, Commonwealth Bank (CBA) received a payment of approximately $450 million for the sale of CommInsure. It followed a $500 million upfront payment in November 2019.
The bank said it expects the ultimate completion of the divestment will occur via a statutory asset transfer in the second half of FY21, at which time the remaining proceeds of approximately $100 million should be received.
CBA has now received a total of $2.3 billion of proceeds made up of $2.1 billion in cash and $240 million in dividends payments from CommInsure Life.