Super funds offering health insurance as a bundled product would be an ideal evolution of the savings and healthcare industries, but achieving this goal is a long way off - if it ever happens, insurers say.

Jeremy Cooper, chair of the Super System Review predicts health insurance to merge with super as part of the evolution of life insurance and super over the next 10 to 20 years.

But insurers and super funds are meeting his predictions with caution and some degree of skepticism.

Jim Minto, managing director of Tower Australia, said health funding requires clear public and private policy positions, but there are none in today's market, he said.

"I think super funds will provide access to health insurance through group type schemes outside of super - people will fund this separately outside their super and preserve their savings," he said.

Specialist life insurance firm Asteron agrees.

"What we see is that a lot of people's retirement savings will go into managing the cost of health insurance," according to an email response from a spokesperson.

Planners are also key to the equation, as many already advise clients about their retirement, including the cost of health insurance. That said, the firm acknowledges that health insurance is not life insurance - so there is still room for innovation between the two industries as people increasingly consider longevity risks.

Damien Green, chief executive of AIA Australia, points out that many funds already offer affinity-based health insurance products provided by third parties.

He also cautions embedding health insurance in super could have prudential and consumer product advice issues.

For John Livanas, chief executive of AMIST Super, there is a clear distinction between what a super fund does compared with a health insurance fund - and the co-mingling of assets could be tricky.

"A health insurance fund is an insurance company - a super fund is not, it's a different vehicle.

"So it would not seem to me to be an easy fit, to fit those structures together," he said.

Super funds which have partnered with health insurers include OAMPS Super (which partnered with MBF), Maritime Super (Superannuation Insurance Services), Telstra Super (HCF) and Auscoal Super (Westfund Health Insurance).


By Ruth Liew
Friday, 10 September 2010 12:30pm


The article above was extracted from the Financial Standard Journals.