Highly active lawyers are forcing industry superannuation funds to rethink their exposure to Total and Permanent Disability (TPD) insurance and there are significant flow-on effects for fund members.
That was a key finding of a roundtable conducted last week by Super Review, with senior industry superannuation fund executives expressing deep concern at the degree to which legislative changes had seen law firms direct their attention away from Workers' Compensation and towards industry superannuation funds and TPD.
MTAA Super chief executive, Leeanne Turner, acknowledged that the problematic status of TPD cover had been at the forefront of her fund's review of its insurance arrangements and noted that, ultimately, the fund had placed an emphasis on death benefits over TPD.
ClubPlus chief executive, Paul Cahill, agreed with Turner and said he believed that TPD had become a risk in the market.
"It is seriously a risk because of two things: One, the shutting down of the workers' comp bit has meant lawyers are now looking for a new avenue for money… and industry funds are going to say this is all too hard or the rates are just going to skyrocket, and the members of the fund who are in there for the right reasons are going to get penalised," he said.
"In the end funds are going to have to drop TPD," Cahill said.
Industry superannuation funds have traditionally been very attractive due to their insurance offerings, this was becoming less possible as the funds tightened their insurance definitions and automatic acceptance limits. The ultimate loser with be the average mum and dad who don’t seek advice from an adviser.