New member processing must be improved if life insurance levels are to increase.
While SuperStream will improve the timely processing of this information, the existing complexity around a new member joining a fund will continue to make adequate insurance of members a challenge for most superannuation funds.
"We support SuperStream 100 per cent, but it is not going to be a panacea in terms of the industry moving to a highly streamlined process," Rice Warner Actuaries director Richard Weatherhead said.
Weatherhead said the delay in member notification about their life insurance cover and the absence of an application form in the default insurance process often meant member engagement was low from the start.
"Most members are offered full cover but only 5 to 7 per cent take up additional voluntary cover," he said.
To help overcome the problem, he said superannuation funds should make personal contact with members about their life insurance cover.
Further, a fund's call centre can access information on a member's insurance cover so they can offer them information. Actively promoting advice to assist underinsured members will also help combat the problem.
Weatherhead said the anticipated fivefold growth in intra-fund advice in the next 10 years would go a long way in facilitating awareness and information on life insurance.
Although online capabilities to boost voluntary superannuation cover are being enhanced, fund websites must provide the option to speak to someone.
"The human element around online capabilities is important," Weatherhead said.
Meanwhile, the provision of general insurance products is posing a difficult area for super funds to navigate. Weatherhead said while the insurance providers were keen to access the database of superannuation funds, member take-up had not been strong.
This is because funds do not want to be seen to be putting resources into promoting non-superannuation products.
