Terms of reference for a new Senate inquiry on the Australian retirement system include general and life insurance as areas that will be examined.

The Senate yesterday referred the inquiry to the Economics References Committee, which has been given a June 30 2024 deadline to report its findings. The inquiry is not accepting submissions yet as it has not determined the cut-off date for submissions lodgements.

Liberal Senator Andrew Bragg, who chairs the Economics References Committee, says the inquiry will examine how to “better align” insurance with the outcomes Australians expect throughout their life cycle.

“We must ensure that both the legal architecture and industry practice are fit for Australia’s future,” he said in a statement, adding the inquiry will “examine how to improve customer experiences and choice in insurance”.

The terms of reference for the inquiry, “Improving consumer experiences, choice, and outcomes in Australia’s retirement system”, list the following insurance-related areas for examination:

·       regulatory and tax impediments to innovation and uptake of insurance products in retirement;

·       the interaction of health insurance, life insurance, general insurance, and social security supports to retirement outcomes, including options to improve incentives that drive consumer outcomes and support the sustainability of the retirement income system;

·       the impact of climate change on insurance premium affordability and accessibility; and

·       the impact that climate change is likely to have on insurance premiums for products including life, home and contents and small business.

Specific to life insurance, Senate Bragg says over the last 12 months, complaints about death benefits offered by super funds rose by 136%.

“There is a systemic problem with these products, which the government has failed to address,” he said.

The Insurance Council of Australia (ICA) has responded to the launch of the inquiry, pointing out there’s a separate federal inquiry into the industry’s responses to last year’s floods.

“The ICA notes the establishment of the Senate inquiry into consumer experiences, choice, and outcomes in Australia’s retirement system and will review the terms of reference in more detail,” a spokesperson said. 

“The ICA has been closely engaged with the House Economics Committee Inquiry into insurers’ responses to 2022 major floods claims, which is also examining the affordability of insurance and the impact of disaster mitigation efforts. 

“The ICA will work with the Senate Committee to reduce any duplication of the work of the House Economics Committee.”

Life peak body, the Council of Australian Life Insurers (CALI), says the industry welcomes the inquiry’s focus on improving retirement outcomes for Australians and ensuring their financial security beyond their working life.

“Australia’s life insurers stand ready to protect people’s wealth when they retire with a range of retirement products that can offer a more reliable and stable retirement income,” CEO Christine Cupitt said.

“CALI will work constructively with any forum looking at these issues. We are committed to ensuring the life insurance industry works for Australians, so they can live in a healthy, confident and secure way over their lifetime."