Super Insurance Reforms Passed With Dangerous Worker Carve-Out

The federal government has secured its ban of default insurance cover for low balance and younger superannuation members, with an exemption for workers in so-called dangerous occupations.

The legislation was passed by the Senate with a number of amendments on Thursday, preventing superannuation trustees from automatically providing insurance  to members under 25 and those with balances below $6000, including new members.

The passage comes despite what Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, described as an “aggressive” lobbying campaign by the life insurance and superannuation industries in an op-ed for The Australian Financial Review.

Xavier O’Halloran of the Choice-affiliated Super Consumers Australia (SCA) group praised the development as a “great day for superannuation consumers” and an “end to the blunt one-size-fits-all approach to insurance in super”.

However, an amendment to the bill, moved by the government after intervention from crossbenchers, will see some members exempted.

Emergency services workers, as well as Australians working in occupations deemed dangerous by professional actuaries, could still be subject to default insurance cover even where they are aged under 25 or have an account balance of less than $6000.

Trustees who wish to continue providing default insurance will need to seek certification from a fellow of the Institute of Actuaries of Australia that the relevant member works in the “riskiest quintile” of occupations, based on rates of death and total and permanent disability over the past five years.

An SCA spokesperson said the group broadly supports the amendment, despite writing to crossbenchers on August 27 urging them to be wary of lobbying in favour of occupational carve-outs “in the absence of any supporting data or evidence”.

It is understood that representatives of the police and emergency services have also been actively canvassing crossbenchers in favour of the carve-out.

While the exemption may be advantageous to some super funds — and especially those with a large proportion of members working in dangerous occupations — in allowing them to continue providing insurance on an opt-out basis, it also could present them with a fresh administrative challenge.

Superannuation lawyer John Berrill told the Financial Review that many funds won’t necessarily have the underlying data to act on the exemption and that obtaining certification from an actuary is only half the battle.

“This amendment puts the onus on trustees to determine which of their members are in dangerous occupations and which are not, and this is going to create a real problem and headache for them,” Mr Berrill said.

“[It will be] really hard [for trustees] because a member and an employer are not actually obliged to provide the trustee with information about their occupation.”

A further amendment moved by One Nation senator Malcolm Roberts will see the legislation’s effective date extended from February 2020 to April 2020.

Mr Berrill, who primarily acts for plaintiffs, said the extension provides welcome relief for consumers and allows them greater time to make an important decision regarding their insurance cover.

But it falls well short of the July 2020 extension sought by Labor. A proposed amendment moved by NSW senator Jenny McAlister was defeated 33-29.


By Aleks Vickovich writes about banking, wealth management and financial services from the AFR's Sydney newsroom. Email Aleks at

Financial Review

19 September 2019

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