The proposed ban on own-occupation total and permanent disability (TPD) insurance cover in super is unlikely to have much impact on premiums, AIA said.

"From the overall group perspective, own-occupation is still a relatively small percentage [of overall premiums]," AIA chief distribution and marketing officer Damien Mu said.

"When we had a look at it for the funds that we insure, it was immaterial in terms of overall contributions," he said.

But Mu warned that the impact for each fund and group insurance policy would be different.

"Each pool needs to be assessed on its own merit," he said.

Treasury announced earlier this month that it will prohibit super funds from offering any insurance products that do not fit the Superannuation Industry (Supervision) (SIS) Act definition of permanent incapacity.

This means the existing arrangements for own-occupation benefits will be phased out, because trustees would be unable to release the claim money.

Own-occupation cover is generally part of a premium cover and requires the member to pay higher fees.

These premiums could potentially have been used by funds to negotiate better rates for overall group contracts, but Mu said own-occupation cover was still a small percentage of the market.

"What we've seen is that own-occupation over the last five years has become far more prevalent within superannuation, however, it probably still doesn't have the scale that it has in the retail market."

"Probably, you haven't seen enough premium contribution has come in to say that will affect those larger pools for now," he said.

Although Mu recognised the need to have consistency across the regulations, he argued that certain professions are more vulnerable to disabilities that would prevent them from doing the job they are trained for and that members in these industries would benefit from holding the cover within super.

"You are potentially disadvantaging people who then have to go outside super and find retail policies at a higher premium," he said.

Mu said it would be better if trustees have some degree of flexibility in applying the release definition.

"We understand superannuation regulation, but we think it should be up to the trustee's discretion who they can align with that definition to meet those members that need that particular cover in place," he said.

"If the condition is not met, than ultimately the regulation applies. However, what we believe is that the trustee should be able to assess that," he said.