Unions ‘coerce’ employers into buying overpriced insurance

Unions ‘coerce’ employers into buying overpriced insurance | Insurance Business

Unions ‘coerce’ employers into buying overpriced insurance
An Australian association that represents more than 60,000 people in a range of sectors has slammed unions for ‘coercing’ employers into paying costly income protection insurance products because of the commissions they receive – rather than using alternative insurance providers.

The Australian Industry Group, in a submission to the Australian Parliament’s inquiry into legislative changes to regulating the conduct of building industry participants, condemned unions for forcing employers to pay into construction industry funds and paying for particular income protection insurance products “where the insurance provider is paying very large (undisclosed) commissions to construction industry unions”.

It stated that the income protection insurance products which an employer is forced to pay for are more costly for the employer and provide fewer benefits to the employees than other products in the market.
However, because of the “very substantial commissions” paid to the unions, the unions refuse to accept an employer’s offer to provide equivalent or better benefits to employees through an alternative provider such as an industry superannuation fund or the employer’s insurance company.

Controversially, it added: “As union membership revenue has declined, these inappropriate revenue streams have become central to union finances – particularly for construction industry unions. These lucrative revenue streams no doubt result in the fines which militant unions regularly incur for unlawful conduct having a significantly reduced impact on their operations.”

It called for the Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 to address the issue by including of provision, forcing bargaining representatives, who are not the employee or employer, to disclose in writing to other bargaining representatives and the employee of any direct or indirect financial benefit they will would derive from each term of the proposed enterprise agreement. This must be done before the enterprise agreement is made and before any application for a protected action ballot order is made.

All submissions were reviewed as part of an inquiry into the bill and the senate standing committee on education and employment made its final report on the bills in December.  It stated the bill would provide Government with the power to prohibit intentions to make an employee or employer nominate a particular superannuation fund. In addition, the chapter proposes to ban actions that intend to coerce or apply undue pressure to make, vary or terminate enterprise agreements.

It recommends that the bill is passed. The bill is currently sitting before the House of Representatives.
  • Broker 2014-02-03 1:32:38 AM
    Surely can't be long until the Gov step in and stop deals around the group PA schemes that buy cover on behalf of members/people and they have never had the chance to make a choice if they want or require the cover. It really should be an opt-in choice for members as the current all-in gives to much power to the few to make purchasing decisions with members money on behalf of members……what is ironic is a large number of members don’t even know they have the cover or how to claim for it! The recent issues in this group purchasing space raises a number of questions around these types of schemes. 1. Who makes the purchasing decision? 2. What qualifications do the people making the purchasing decision on behalf of members have to make these decisions? 3. Are members aware of the total annual cost to the union/group/member for the cover? 4. Are these programs advertised for tender or are they kept in-house and never really put out to the wider broker market. It is interesting times ahead in this space as members need to be sure that there funds are being spend wisely and in a completely transparent way when it comes to PA products.
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