Executive Summary

In summary, the ACTU is opposed to allowing private sector life insurers a greater role in worker rehabilitation, including via IP and TPD insurance, as this represents a move towards further privatisation which would ultimately:

  • Undermine the expansion of the public health system;
  • Undermine the universality of access and coverage and primarily public nature of the workers’ compensation system;
  • Help shift the cost of workers’ compensation from the employer to the worker;
  • Impact superannuation costs as superannuation funds are required to withdraw money from the general fund in order to meet legitimate claims costs that the insurance companies underwriting their policies refuse to pay, as has often been the case;
  • Lead to ‘step down’s, whereby life insurers reduce the benefits paid if workers do not participate in the therapies recommended by life insurers;
  • Compromise the independence of doctors and the voluntary nature of treatment.  Doctors’ groups raised a plethora of concerns about the practices of the life insurance industry in the previous inquiry into the life insurance industry by this Committee. As the life insurance industry is motivated by profit and has an incentive to reduce the costs of claims, we are concerned that life insurers’ earlier involvement in rehabilitation will allow them greater control over treatment and give them access to broader medical information. This information can be used to build data profiles to add cost-saving exclusions and to unfairly reduce claims; and
  • Be against the public interest. The recommendations of this Committee’s recent inquiry into the insurance industry; for example, Recommendations 8.1 through to 8.7 and 10.3 highlight serious inadequacies in the life insurance industry. On this evidence alone, any expansion of the role of life insurance industry would be anathema to the public good and is opposed.

The ACTU submits that there are numerous coverage gaps in the underfunded public health and social security systems and that the public services should be expanded and strengthened to address this. Likewise, there are various ways that the publicly-administered, employer-funded public workers’ compensation system is inadequate and should be expanded. This is preferable to eroding the public systems further through substitution with private provision by for-profit companies where the worker pays the cost.

The Terms of Reference for this inquiry are very broad and group together different private insurance products with varying terms and conditions which cannot be assessed without a very clear map of their interactions and the purpose and details of any intended changes. We discuss the ills of the proposal put forward by the Financial Services Council (‘FSC’) to this inquiry[1]  as an example of the misguided nature of private substitution and of giving private life insurers a greater role in workers’ compensation and rehabilitation. It is incumbent on those seeking to change the workers’ compensation, superannuation and health insurance systems to provide detailed proposals and demonstrate the changes are in the public interest. The FSC proposal is not supported by sufficient evidence or detail and is against the public interest even in principle.


[1] See Submission 1 to this inquiry by the Financial Services Council, dated 20 April 2018.