Cbus Super has maintained existing insurance cover levels for more than 550,000 mostly ‘high risk’construction and building industry members but a tightening insurance market will mean premiums will rise under a renegotiated contract with Hannover Life Re of Australasia Ltd.
An increasing number of TPD claims and payments, rising operational costs and rising capital requirements for insurers have impacted significantly on insurers’ costs, driving up premiums for Cbus members for the first time in 15 years.
Cbus CEO, David Atkin said it is unavoidable, given current insurance market conditions, that in order to maintain access and benefit levels, Cbus had to join many other super funds which have recently increased members insurance premiums.
“Cbus members work in some of the toughest conditions of any industry and that is why maintaining levels of cover for our members and their families is essential” said Mr Atkin.
“We have provided life insurance since inception of the fund in 1984 and, shortly after, TPD access to members in occupations deemed ‘high risk’. For many of these members and their families insurance would have been beyond their reach. We have paid in excess of $1 billion in insurance benefits over that time.
“TPD claims and payments have risen significantly over recent years, from $40 million in 2010/11 to a forecast $90 million this year. While this has impacted the cost of insurance it has provided valuable support for members who have become seriously ill or injured.
“The rise in TPD claims appears to be occurring as a result of increasing awareness by members of their insurance cover; a softening of the economy; and greater lawyer participation and activity in the area.
“Our insurance premiums have not risen over the past 15 years and during that time we have significantly enhanced members’ insurance benefits including extending death cover, improving benefit scales, increasing automatic acceptance limits and introducing Terminal Illness Benefits.
“We have worked hard with our insurer to maintain fund members’ existing access to and levels of insurance cover. This has meant avoiding the imposition of reduced automatic acceptance benefits and reduced default cover levels.
“But, since the GFC, it is a very tough and tight insurance market with insurers facing difficult cost pressures.
“In the current circumstances we have achieved the best possible outcome and we believe that our insurance offering is still one of the most competitive in the market based on accessibility and levels of cover for people working in the construction and building industry” said Mr. Atkin
Cbus default provides 4 units of both Death and TPD cover for manual occupations. Premiums for default cover will rise from the current $1.95 total weekly cost per single unit of Death and TPD to $3.58 effective 1 July 2014 with no change to existing benefit levels or member access to cover.
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