Industry fund members face insurance sting

Two of the country's largest industry superannuation funds — AustralianSuper and REST — have increased the cost of insurance for members.

The two funds, which have their group insurance needs met by separate insurers, have announced significant increases.

AustralianSuper's changes result in it increasing, from mid-year, the cost of its death and total and permanent disability (TPD) cover by approximately 38 per cent, while the cost of income protection cover is due to increase by 25 per cent.

AustralianSuper's group insurance provider is TAL.

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By comparison, retail industry fund REST has increased the cost of its death cover by around 45 per cent, with TPD increasing by 30 per cent and income protection by 3 per cent.

Informing members of the increases, AustralianSuper said "insurance prices in Australia have risen significantly recently. This is due to rising operational costs faced by insurance companies, an increase in claims and new rules that require insurance companies to hold more money to support their businesses.

"We're an industry fund run just to benefit members, so we only increase costs when we have to. We can't prevent this cost rise — but as Australia's largest industry super fund, we've used our size and scale to minimise the impact on our members."

REST was less specific about the increased cost to members but flagged that it would be communicating with members individually.

It said that "premiums needed to increase, in line with the industry, due to a large increase in claims".

REST's group insurer is AIA Australia.