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Trustees urged to improve life insurance offerings
Superannuation trustees need to improve their life insurance offering for members following a review by the Australian Securities and Investments Commission (ASIC).
The regulator undertook a review of 15 super trustees from a broad cross-section of fund types to identify whether funds could achieve better member outcomes by enhancing their life insurance arrangements following an earlier review in 2019.
This included ensuring they had robust systems, processes, and controls to effectively administer their insurance arrangements as well as reforms from the design and distribution obligations (DDO).
While ASIC identified some trustees had shown progress in their insurance offering, this was “not necessarily consistent” across the industry and trustees had not made “sufficient effort in all areas”.
It found:
- Many trustees had made changes to the design of their insurance arrangements to better meet member needs and provide value for money, such as by changing restrictive ‘total and permanent disability’ definitions.
- Many trustees had worked with their insurers to streamline their claims processes to make them easier for members to navigate and taken steps to enhance their oversight of insurers’ claims handling practices.
- Some trustees had improved the way they explained their insurance offerings to make it easier for members to understand their insurance and make appropriate decisions for their circumstances.
ASIC commissioner, Danielle Press, said: “Insurance in superannuation provides a built-in safety net for millions of [Australians]. Superannuation trustees play a central role in deciding what life insurance is made available to their members and how it is provided.
“Whether it is default or optional insurance, we want fund members to have confidence that they are receiving value for the insurance they hold through their super and that they will be able to claim on it when they need to.
“I strongly encourage all trustees to commit to a thorough analysis of their insurance arrangements using the information and action points in ASIC’s report to identify where they fall short and address any gaps. Life insurers also need to play their part by working collaboratively with trustees to implement any improvements.”
The regulator had written to the trustees involved to provide feedback and also recommended key actions for trustees to make improvements.
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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So legislation weakens insurance for super fund members, many are excluded by age and account balance limits, advisers are totally excluded from providing education and assistance through 'intra-fund' advice, the insurers lose revenue and therefore profitability and potentially sustainability, then ASIC says they have to do better?
How can you expect anyone to do better when it is legislated that they have so many hurdles to jump, lower revenues, increased admin costs etc.....