HESTA will introduce reduced premiums for insured members as part of its renewed group insurance agreement with AIA Australia.
The super fund said the changes will apply to existing levels of cover and follow a competitive selection process that began in late 2024.
Chief executive officer Debby Blakey (pictured) said the updated arrangement is intended to improve affordability and accessibility for members.
“As a fund focused on healthcare and community services, ensuring simple access to appropriate and affordable insurance coverage is critical and can provide peace of mind to members and their families,” she said. “It’s a great outcome for our more than one million members that we’ll be able to help cut insurance costs for them at a time when many Australians are experiencing higher prices.”
She said HESTA will also collaborate with AIA on policy terms and conditions, with the aim of supporting more streamlined access to benefits and improving claims outcomes.
Over the past 12 months, the fund has paid out more than $186 million in insurance claims to members.
The new terms, including pricing and product design, are expected to be finalised later in 2025 before the agreement takes effect in 2026.
The reappointment extends a relationship that began in 2018 and was last renewed in 2023.
HESTA said several insurers participated in the recent tender, submitting proposals that were assessed on multiple criteria.
AIA’s service model includes a range of rehabilitation, mental health, and return-to-work programs, which align with the needs of HESTA’s predominantly healthcare and community services membership.
The announcement coincides with AIA Group Ltd reporting value of new business (VONB) of US$1.5 billion for the March quarter, up 13% on a constant currency basis from the same period last year.
The insurer said growth was driven by increased activity in Hong Kong and higher demand from customers purchasing policies outside their home markets.
Annualised new premiums rose 7% to US$2.6 billion for the quarter. Hong Kong operations recorded a 16% VONB increase, while mainland China posted a 7% decline, which the company linked to lower assumptions for long-term investment returns and a fall in sovereign bond yields.
Elsewhere, Singapore reported a 15% VONB rise in 2024 and a 52% lift in annualised new premiums, though margins narrowed due to a greater focus on long-term savings offerings.
GlobalData forecasts steady growth in Australia’s life insurance sector over the next four years, with gross written premiums expected to rise from $26.2 billion in 2025 to $30.5 billion in 2029 – a compound annual growth rate of 3.9%.
The firm projects a 2.9% GWP increase in 2025, supported by economic recovery, an ageing population, and stronger engagement with health and financial planning.
A sharp fall of 24.4% in GWP in 2024 was linked to the adoption of IFRS 17 accounting standards.
GlobalData noted that the decline reflected a technical adjustment rather than a drop in underlying market demand.
