About 1.6 million people are likely to lose life cover by 2021 because of the Putting Members’ Interests First bill, which makes insurance opt-in for low-balance super accounts and young members.

This will grow to nearly 2.3 million after eight years as it begins to fully affect under 25s.

The Australian Superannuation Funds Association survey reveals that demographics and the level of member engagement influenced opt-in rates with the previous Protecting Your Super (PYS) bill, with corporate funds particularly successful reaching members. That bill made insurance opt-in for “inactive” accounts.

The percentage of super fund members who decided to keep their insurance in super when opt-in legislation was passed varied among super funds from 7% to up to 40%.

The survey says funds with the highest opt-in rates had a strong occupational affinity with fund members, or their members work in dangerous industries. Communication also helps lift engagement.

Up to 3 million members, or 20% of the total number of accounts with life cover, are likely to lose coverage from the PYS legislation. The average opt-in rate was 16%, or 485,000 people, which the survey asserts is relatively high.

MLC Chief of Group and Retail Partners Sean McCormack told insuranceNEWS.com.au that funds which used multiple communication methods to reach members have achieved the best results with the PYS legislation. MLC Life worked with Vision Super on a two-week phone campaign.

He says the 16% opt-in rate is a good result for a low-engagement category like super and insurance. “We’re in genuine territory where this sort of change is unprecedented.”

Super funds that want to be more successful reaching their members before the PMIF laws take effect must be good at segmentation, Mr McCormack says.

“No two members look the same and so they’ve got to be segmented to understand their different needs and demographics and communication preferences.”

Funds that made member communication a priority for a sustained period have been more successful getting members to opt-in to the PYS legislation, Mr McCormack said.

A recent MLC Life survey showed 52% of people hadn’t heard of the PYS legislation, underscoring failed efforts to reach super fund members about the insurance changes, while a recent MetLife survey also reveals widespread ignorance about how insurance in super works, what it costs, or how to modify it.

Super Consumers Australia – a Choice subsidiary – has been scathing of super funds’ ability to communicate with members. Funds need to do a much better job of communicating how insurance might meet members’ needs, not “scare them into taking up worthless cover”, acting director Xavier O’Halloran said.