Only one in three Australians understands the life insurance products and benefits they hold, according to the Council of Australian Life Insurers’ (CALI) latest Life Insurance Sentiment Tracker, released July 20, 2026. For the insurance industry, the more pointed question is why – and the answer runs deeper than member communication.
Group insurance through superannuation remains the dominant life insurance distribution channel in Australia. As of June 2025, around 9.3 million lives were covered by group superannuation arrangements, against approximately 12 million Australians receiving employer superannuation contributions – meaning a material share of the contributing workforce holds no default group cover at all. That gap has a legislative origin. The Protecting Your Super (PYS) package required super funds to cancel insurance on accounts that had been inactive for 16 months, unless members opted to retain cover. The Putting Members’ Interests First (PMIF) Act restricted trustees from providing default insurance to new members under 25 and to accounts that had never reached a $6,000 balance. The reduction in lives insured broadly matched the Association of Superannuation Funds of Australia’s (ASFA) expectations at the time – a fall of around 5 million individuals, after accounting for modest opt-in rates and some funds electing to maintain cover for members in dangerous occupations.
ASFA, which has publicly called for the 2019 settings to be revised, published modelled estimates in March 2026 of what those coverage losses mean in practice. Based on assumed claim incidence rates applied to the population that lost cover, ASFA estimates that around 5,000 Australians a year have died without life insurance cover since the 2019 changes, with their families missing approximately $670 million in death benefits annually, and that a further 11,000 people a year are missing an estimated $1.5 billion in TPD benefits. Those figures are projections derived from the Australian Prudential Regulation Authority’s (APRA) claims and population statistics, not observed payment data.
ASFA chief policy and advocacy officer James Koval said the findings point to a mismatch between current policy settings and present-day conditions. “These laws were meant to protect balances, and that intent was sound. But the mechanism was too blunt. Insurance was switched off by default, often leaving people unaware it had happened. The problem these laws were designed to solve – unwanted multiple accounts and balance erosion – has been largely addressed through other means. The data makes a strong case for revisiting whether the current settings are still doing more good than harm,” Koval said.
CALI reported that life insurers paid almost $6 billion through approximately 54,000 group superannuation claims over the past 12 months. Independent APRA data provides further context. For the 12 months to December 2025, the industry average claims admitted rate for group super death cover was 98.1%, with an average finalisation time of 0.8 months. For TPD cover, the admitted rate was 90.2%, with an average finalisation time of 3.5 months.
APRA’s data also show the group super death cover segment covered 9.24 million lives as of December 31, 2025, with annual premiums totalling $2.25 billion. TAL accounted for 46.4% of annual premium in this segment, AIAA 26.1%, and MetLife 13.9%. KPMG’s 2025 Life Insurance Industry Insights noted that the group life market remains concentrated among a few providers, with APRA’s push for superannuation fund consolidation further contributing to that trend. Group super benefits declined from 29.7 million in 2019 to 21.9 million in 2025, though the market has stabilised over the past two years, with super funds continuing to focus on managing account erosion impacts from premium rates.
CALI CEO Christine Cupitt framed the awareness gap partly as an access-to-advice problem. “Many people may already have life insurance switched on inside their super, giving them access to death and disability cover. This protection may be quietly working in the background, but it isn’t a set-and-forget benefit. For many Australians, accessing a financial adviser is out of reach. But they should be able to get straightforward, professional help to understand the cover they have,” Cupitt said.
CALI has pointed to the Federal Government’s Delivering Better Financial Outcomes (DBFO) Tranche 2 reforms as a mechanism under which life insurers could provide simple, product-specific advice directly to customers. Assistant Treasurer Andrew Mulino, who pledged to prioritise DBFO Tranche 2 “as soon as possible” following the 2025 election, walked back that commitment in February 2026, citing the aftermath of the Shield and First Guardian collapse as a factor stalling the reforms.
ASFA’s position is that improved advice access alone is not sufficient. The organisation has recommended extending opt-out insurance to all members aged 21 and over, applying default cover to new full-time employees from day one rather than waiting for balances to reach $6,000, and replacing automatic cancellation of cover on inactive accounts with an enhanced member notification and opt-out process. A nationally representative ASFA survey conducted in March 2025 found that 76% of respondents said knowing they were covered for life insurance and TPD through their super provided them with confidence for their financial future, reinforcing the organisation’s case that the product delivers value when members are aware of it.
As of the time of publication, the Australian government has not announced any formal review or consultation into the PYS or PMIF default insurance settings – in contrast with the suite of post-Shield and First Guardian consultations Treasury released in April 2026, which focused on platform governance, superannuation switching, and compensation mechanisms rather than default group insurance design. The commercial implications of that inaction are direct: with superannuation fund consolidation reducing the pool of funds tendering for group insurance mandates and further concentrating an already concentrated market, the question of whether the 2019 legislative settings are revised will shape group insurance distribution, product design, and premium volume for years to come. For now, the industry is navigating both the advice gap and the coverage gap without a regulatory timeline for resolving either.
