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”.
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.