More calls to harmonise insurance rules

There have been further calls for the harmonisation of regulations impacting insurance both inside and outside of superannuation.

The latest call has come from BT Financial Group which has used its submission to the Joint Parliamentary Committee Inquiry into the Life Insurance Industry to urge an end to the differential treatment of TPD claims inside and outside of superannuation.

It said that in circumstances where current research suggested that more than 70 per cent of Australian life insurance policies — more than 13.5 million separate policies — are held through superannuation funds such harmonisation was necessary.

The submission pointed out that in 2014, under the Stronger Superannuation reforms, changes were made to the Superannuation Regulations which required that policies established through superannuation from 1 July 2014 be consistent with a specified condition of release.

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"This means that the conditions under which a claim can be paid from a superannuation policy is limited, by product design, to the regulations permitting superannuation access," it said.

"For example, a non‐superannuation TPD policy may provide cover for a person where they are assessed as being unable to work in any occupation for which they are reasonably suited, but still pay a claim where the person is able to work in a significantly reduced earning capacity, limited to 25 per cent of their pre‐disability income."

However, it noted that where such a policy was established through superannuation, the ability to return to work, albeit in a reduced capacity, would preclude the insured from being able to claim.

"In our view, consideration should be given to broadening the conditions of release under the current superannuation regulations, to accommodate certain benefits paid from polices of life insurance," the submission said.