Jane Hume (Victoria, Liberal Party, Assistant Minister for Superannuation, Financial Services and Financial Technology) | Hansard source

Yes, you're right. Cross-subsidisation is the foundation of group insurance. However, the reason why we have brought forward this legislation is to look after the most vulnerable in that cohort. They are essentially cross-subsidising people who are more likely to claim unfairly and to an unreasonable extent. The government believes that cross-subsidies arising from inappropriate cover, where they exist, are unfair and shouldn't be allowed to continue. By unwinding these unfair arrangements, the government's reform package may result in a modest premium increase for the majority of cohorts. However, the ultimate effect of these reforms will be heavily dependent on how trustees and insurers respond to these new arrangements. The government's aware that certain funds are increasing premiums. In many cases, there are a number of reasons for that premium increase, including the unwinding of age based cross-subsidies, changes to the underlying cover of the policy and changes to the member base of the fund.