The CEO of the Financial Services Council (FSC) wants to explore how the life insurance industry can help reduce the future costs of the welfare system.
Speaking at the FSC Annual Life Insurance Conference 2014, John Brogden said the financial services industry should increase its already significant role in supporting the sustainability of the federal budget.
“Life insurance needs to be seen in the context of its capacity to reduce government outlays,” he said. “Underinsurance has a significant impact on the federal budget as many of those with insufficient insurance ultimately draw on the government through various pensions.”
Until now, the potential for life insurance to reduce welfare costs has not been considered, he added.
The FSC is in the process of examining how the industry can help to alleviate the future costs of the National Disability Insurance Scheme and the Disability Support Pension for the government.
“Life insurance can be the private sector solution to the increasing budget costs of welfare just as superannuation is the private sector solution to the costs of an ageing population, and private health insurance is a private sector solution to managing health care cost,” he said.
At the conference Brogden also advocated for proactive legislative changes within the life insurance industry that are driven by the market; and co-ordinated and led by the FSC.
One of the touted changes is the introduction of a seven year limit on group insurance disability claims to help the industry manage pricing with more certainty.
Another is a modification to the Private Health Insurance Act so insurers can fund medical treatment for claimants to improve return to work rates.
“This is an important change which will deliver better outcomes for claimants and will help to manage increasing claims costs for insurers,” said Brogden.