New data rules forge missing link between insurance and super

Part 1: New data rules forge missing link between insurance and super
Part 2: Can MySuper timeframes actually be met?
Part 3: The search for common standards on terminology and data
Part 4: Stronger Super - auto-consolidation or auto-confiscation?
Part 5: The post-election prospects for Stronger Super
Part 6: The outlook for group insurance
Part 7: Making funds transparent on insurance premium rises

Something quite unexpected is happening involving the confluence of Australian super funds, insurance and demanding new prudential and data protocols. And the outcome could be more realistically priced policies, as a Super Review roundtable discovers.

Mike Taylor, managing editor, Super Review: Welcome to the TAL/Super Review Roundtable and as you all know, the key subjects today are data integrity and prudential standards.

I guess what we are talking about here is a lot of the implications which flowed out of Stronger Super and where things are headed on that front. 

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From doing a bit of background checking there’s a bit of evidence out there that whilst everybody agrees that SuperStream is an excellent way to be going and was something of a no-brainer in a policy sense, execution is proving to be quite a challenge for parts of the industry. 

So I thought we might kick off with Geoff McRae from Rice Warner and basically ask your perceptions, Geoff, as someone who is seeing the broad spectrum of the challenges amongst insurers, super funds, administrators and custodians.

How well do you think the industry is actually coping? 

Geoff McRae, senior analyst, Rice Warner: Well the industry, I think, is trying very hard to deliver a good, effective service: in SuperStream’s case especially, there’s a lot of co-operation between different providers and different funds, which in the end will contribute to greater efficiency. 

There’s still a lot of work to be done and I think a lot of funds and administrators are finding that a challenge and probably will for a little while forward.  

You mentioned insurance also, and there are a lot more strict insurance state requirements that come online from 1 July this year.

There is a significant amount of difficulty being experienced by a number of funds in properly meeting those requirements, although I feel that APRA [the Australian Prudential Regulation Authority] will probably give them a bit of leeway to sort that out. 

Mike Taylor, Super Review: Jenny, you’re looking at it purely through the eyes I guess of the insurer, but also knowing how the parts interlink. How are you seeing it? 

Jenny Oliver, group life, commercial manager, TAL: I agree with Geoff’s comments. I think the ambitions are very good and we’re looking to really improve the outcome for the members through this.  

One of the areas that I’m particularly focused on as an insurer is around the data and data integrity. 

Data is the foundation of the industry and it’s what the pricing is based on. So I think it’s really important we ensure that that data is integral as possible – and that’s one of the things that we’re focussing on as an industry with our funds, with other insurers, trying to improve that data, the quality of the data and getting that out into the market. 

Mike Taylor, Super Review: Alex Hutchison, you’re a fund CEO. Doubtless you’ve been speaking to your providers, your administrators, your custodians, everyone.  How do you see it settling in? 

Alex Hutchison, CEO, Energy Industry Super: I think we rely obviously heavily on our custodians and administrator in this respect, and what we can see – in particular for the first lot of reporting – is that we’re getting there by the skin of our teeth. I think it’s also on the back of a pretty heavy reform agenda. 

There’s been a lot of change, so this is probably almost the last big piece of change in this latest burst of change. I think you are dealing with fatigue. 

To be fair, APRA has listened to the industry; they did modify a number of the Day One reporting requirements and I think that as long as APRA continue to be flexible in that approach, we’ll get there. 

I think that it’s quite a Herculean task to get through this volume of change, particularly on the reporting side. No one disagrees with what the ultimate aim is, it’s the timeframe. 

Mike Taylor, Super Review: Jeff Scott, you’re also seeing it from the perspective of an insurer. How do you see it playing out to this point? 

Jeff Scott, executive manager, business growth services, CommInsure: I think that in dealing with the various scripts that are involved – the administrators, the trustees of super funds and looking at our back office as well – it’s making sure that it’s not data overload for the trustees. Because this is merely one report of many reports that they have to modify as part of the APRA prudential standards. 

I know that there’s a strong investment focus with many of the trustees right now who want to make sure that this doesn’t become something that’s thought of last minute. 

So engaging with the trustees early in the piece, which is what I believe most of the insurers are doing right now, has been essential to making sure that we actually get the reports done on time in a consistent manner with the appropriate data at the appropriate times. 

Mike Taylor, Super Review: Andrew Bragg from FSC, you guys made a number of submissions in the lead-up to the changes and now we’re into the execution phase. Do you think enough transition time has been given? 

Andrew Bragg, policy director, Financial Services Council: Look, I think there’s a bandwidth problem here where institutions are looking at MySuper, SuperStream changes also in prudential standards, which are governance reforms. 

Fundamentally I think you’d probably make a fair assessment that people’s imaginations have been captured by things other than SuperStream, whereas if you go back to first principles, SuperStream was about basically two things. 

One, enabling easier account consolidation for members and two, creating efficiencies for having compulsory data sets. 

Really, what we are talking about here is that APRA wants to collect some data around how these data centres are being booted down and what is the benefit to the industry?  

In terms of achieving these by 1 July this year, I’d say it’s probably unachievable, and that timeframe will have to be set back across the board. This isn’t just about SuperStream, it’s also timeframes in the niche super area, which are unrealistic. 

Adam Kirk, general manager, distribution, Australian Ethical: Yeah, I would agree that some of the reporting requirements are just not there yet.

The rest of the legislation seems to have worked and we’re quite ready for it, but the reporting is just not there. I think there’s a level of the industry that’s still trying to move the target.

Tranche four hasn’t been passed yet, so we still don’t know entirely what we’re going to be doing.