The design and disclosure of occupational defaults of insurance inside superannuation need to be improved by trustees to deliver better member outcomes, according to the Australian Securities and Investments Commission (ASIC).
ASIC said trustees could be contravening their legal obligations if they failed to ensure that insurance premiums charged to members were based on appropriate statistical assumptions. When a fund’s occupational default was set to the highest risk category to ensure all members were covered regardless of occupation, premiums were comparatively high.
ASIC’s review into the occupational default practices of 21 trustees who were using a high-risk occupational category as the default in their MySuper products found three main issues.
These were:
ASIC said to enhance member outcomes with default insurance super funds should ensure that:
ASIC commissioner, Danielle Press, said: “Our review found that the design and disclosure of occupational defaults are two areas where trustees can do more to improve member outcomes. They can do more by gathering better occupational data about fund members and by providing better disclosure to their members.
“Better occupation data about members will assist trustees in designing fair and reasonable default insurance, and good, clear disclosure can empower their members to make better informed decisions about their insurance arrangements.”
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”.
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