Group insurance roundtable
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
A Super Review roundtable examines the MySuper timetable and the likelihood that anybody can meet its targets.
Mike Taylor, managing editor, Super Review: Okay, the regulator has actually recognised that tranche four hasn’t actually made its way through the Parliament, [given it probably won’t now].
They’re showing a lot of flexibility, but will anybody meet those targets that were initially put in. So what’s your expectation, Alex, on what’s reasonable for extending the implementation?
Andrew Bragg, policy director, Financial Services Council: I think if you look at the tranche four bill, which is the MySuper tranche four bill, there’s a requirement to provide a product dashboard by 1 July, 2013.
Now, of course, that sounds perfectly reasonable – if you knew what the dashboard requirements were. It basically says, “refer here to these super regulations where you’ll find dashboard requirements”.
Now that hasn’t been settled yet, so in terms of a more reasonable timeframe, clearly in terms of rolling PDEs and all those practical things, that’s not a viable timeframe.
So what then becomes obvious is it’s either a 31 December, 2013 or it’s a 30 June, 2014 conversation around the dashboard, which I think is symbolic of the other issues.
Mike Taylor, Super Review: Jenny, you have a view there on where it might comfortably be extended to and therefore not produce unintended consequences?
Jenny Oliver, group life, commercial manager, TAL: For me what’s missing is clarity of what the data. Data can be a number on a page, but it can be interpreted in many different ways depending on the context it’s being derived in and the definition given to the data.
Once we get into it and start trying to pull it together in light of the definitions in the data we’ve been given, we’re going to learn a lot more about that – and similarly for some funds that will be receiving information from various sources and the various definitions.
So I think one of the important things to do in terms of setting an expectation is to go through the initial teething stages, pulling together the information, bringing it all together and consolidating it and saying, “well this doesn’t line up” or “this doesn’t make sense”.
The initial trial run will give us better guidance as to how long it’s going to take, but I do agree that we’ve still got a bit of work to do there to clarify the definitions of everything that they’ve asked for.
It’s one thing to say this is what’s on the page, but what does that mean, what does it pick up, what’s the parameters? They’re all very important considerations for understanding the data that’s been presented.
Jeff Scott, executive manager, business growth services, CommInsure: It’s important to ask why they’re wanting the data that they want, in the form that they want and more importantly, what information does that provide both to the trustee, to the insurer, to the administrator and ultimately, what’s the benefit to the member of the super fund?
If we’re merely having data so that APRA can report on it, that doesn’t do anybody any good.
If that data can then be used to either provide better benefits to the members, provide better turn-around in claims experience numbers or provide better pricing to the members, then that becomes a worthwhile exercise.
But merely reporting the data because APRA thinks it’s a nice thing to have doesn’t do anybody any favours.
More importantly, what happens once they put the data standards in place? There’s three or four guidelines that I see in front of me right now.
That’s what they’re looking for in data standards. The question is how will those change and modify over the next 12 months, 18 months or two years, and more importantly, how easy will it be to capture that data and continue to report on going forward?
Alex Hutchison, CEO, Energy Industry Super: Leaving aside tranche four, I think APRA’s baseline data requirements are sub four hundred data points, and I think that with most of those baseline data requirements, as I said before, you get there by the skin of your teeth.
But then when you look at the further information that’s required and why it’s required, there’s a few question marks there.
For example, there’s some of the queries on reporting in relation to the transparency of holdings – and what is underlying holdings – that funds have to give people for an understanding of where their money is invested.
There are different models you can look at overseas that present that graphically rather than as masses of data, which I think would probably be meaningless if you tried to explain it in detail.
So it’s that type of clarity I think the industry is looking for; to say, “Well, this is how it works overseas, this will give someone a good picture of where their money is invested, for example. Do you really want to have all that underlying data or not?”
So it’s that type of conversation, which takes time, that I think the regulators have to go through with the industry and industry bodies, to give us that understanding to produce the dashboard, for example, which is the example used that is going to be meaningful to members.
Those things are achievable, but it takes time, so you always come back to this time pressure; and probably as Andrew said, it’s a very, very heavy schedule we’ve had to deal with over the past 18 months and year.
Adam Kirk, general manager, distribution, Australian Ethical: Yeah, from Australian Ethical’s perspective we’re actually all for transparency and we’ve been very transparent in our investments for a long time.
So we actually tell everybody exactly what they’re invested in and they can go in and have a look at every company that’s invested. So we would be, from an Ethical perspective, encouraging that to go ahead.
Some people want that level of information and others don’t, but as long as it’s available to the people that do want it, then I think it’s a worthwhile thing.
Geoff McRae, senior analyst, Rice Warner: The dashboard requirements are challenging and they’ll be very useful for increasing transparency and hopefully members’ understanding how their money is invested.
But I think maybe some longer-term control benefits will come more from improvements in insurance data.
As Jenny said before, that there have been problems with data integrity in the past, even with some of the biggest funds, and there have been disputes in some cases between insurers and funds because the data on which rates were quoted was found to be quite different to what the true data was.
The new standards will ensure probably over three to five years that all the funds do have good data on which ongoing insurance premiums can be quoted, and that will be a benefit to the industry.
In some cases recently we have found that issues with data meant that more than half of the insurance market in some cases have declined to quote on some significant cases.
Looking ahead, we hope that something does improve this: although there will be short-term pain, it will give some longer-term gain, I would expect.
