The study – comparing insurance premiums across age, gender and income segments for different funds – found differences in costs across the sectors were becoming negligible.
“The two groups’ premiums have been moving in opposite directions,” Chant West head of research Ian Fryer said.
“Workers in the public sector still enjoy the lowest cost insurance, but the premium differences between industry funds and corporate master trusts have all but disappeared.”
Industry fund premiums are on the rise, primarily due to an increase in disability claims, Mr Fryer suggested.
“These are not just more people becoming disabled, but more people realising that they are entitled to claim – even for disabilities that occurred years ago,” he said.
By contrast, he suggested retail fund premiums are dropping due to legislative changes to commission payments.
“On the other side you’ve got master trusts removing the commission element from their premiums because under the new MySuper regime they’re not allowed to pay commissions to advisers, Mr Fryer said.
“So those premiums have come down, by about 20 per cent on average.”
As an example, Chant West compared each group’s overall premiums for death and total and permanent disability coverage to the median premium for this coverage across all funds.
Industry fund premiums came 0.05 points below the midpoint while corporate master funds were 0.3 points below.
Public sector funds were the cheapest, coming in at 0.19 points below the median, while group retail funds were the most expensive, with premiums 0.2 points above.
