POWERED BY MOMENTUM MEDIA
Additional scrutiny needed for group life policies
The Royal Commission’s (RC) final report has advised on additional scrutiny for registrable superannuation entity (RSE) licensees that engage a related party to provide group life insurance, or who enter into a contract with a life insurer.
Under this recommendation, licensees would be required to obtain and provide to the Australian Prudential Regulation Authority (APRA) independent certification that the arrangements and policies entered were in the best interest of members and would need to satisfy legal and regulatory requirements as well as demonstrate how they would meet the expectations of SPS 250.
Additionally, Commissioner Hayne stressed that the requirement for independent certification would reinforce to RSE licensees “the paramountcy of member’s interests and give members comfort that the arrangements are appropriate”.
“I have set out elsewhere in this report my concerns a about the conflicts that arise where related parties are engaged. These concerns have equal force in the context of group life insurance,” Hayne said in the report.
“Entities that elect to integrate their businesses do so, overwhelmingly, for their own reasons.”
He also stressed that those entities were typically motivated by attempts to increase their market share, revenue and profit and place commercial pressure on their competitors, or “some combination of those factors.”
“That is not to deny the benefits may ultimately flow to consumers from the integrated arrangement. But because the motivation of the integration is, ordinarily, a self-interested one, the congruence of the arrangement with the duty to act in the interests of the other must be closely examined.”
The recommendations also called for the legislation of universal key definitions, terms and exclusions for default MySuper group life policies.
This would include the review of:
- The merits of prescribing higher minimum coverage for life insurance than is currently provided by the Superannuation Guarantee (Administration) Regulations;
- The merits of prescribing minimum coverage for permanent incapacity insurance;
- The merits of prescribing maximum coverage for life and/or permanent incapacity insurance; and
- The merits od prescribing a fixed level of coverage for life and/or permanent incapacity insurance so as to set a standard amount of default insurance across all MySuper products.
Recommended for you
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
